Posted on 23 Mar 2015
China aims to build three to five giant steel mills and boost the crude steel output of its top 10 steelmakers to more than 60 per cent of the country's total by 2025, the state-owned Xinhua News Agency said on Saturday.
China, the world's largest producer and consumer of steel, also aims to boost the production utilization rate for its massive steel sector to more than 80 per cent by 2017, Xinhua quoted the Ministry of Industry and Information Technology (MIIT) as saying in a draft of a revised restructuring plan.
"By 2025, crude steel output of the top ten steelmakers will be more than 60 per cent and China will form 3 to 5 giant steel mills with strong competitiveness," Xinhua said, citing the draft.
An economic slowdown and chronic overcapacity have driven down steel prices to nearly 20-year lows, and saddled many steel mills with big losses.
China has hundreds of steel mills with a total annual crude steel capacity of about 1.2 billion tonnes, leaving excess capacity at an estimated 300 million tonnes.
The output of the top ten steelmakers was 36.6 per cent of the total in 2014, down 2.8 percentage points from 2013, MIIT said in February.
The government has pushed for years to improve the efficiency of its fragmented steel industry, hindered by the efforts of local authorities to protect employment and economic growth.
China is also taking tougher environmental measures to cut overcapacity and ease air pollution. Local governments have been given greater responsibility to enforce the new standards.
As part of the preliminary plan, the government will also improve the threshold and exit mechanism for the steel sector, to achieve orderly shutdowns of inefficient steel mills that do not upgrade.
HEBEI CLOSURE
China's largest steel producer, the northern province of Hebei, will close all blast furnaces smaller than 450 cubic meters and electrical furnaces smaller than 40 tonnes, a report published on MIIT's Hebei website said on Friday.
The move is expected to cut an estimated 57 million tonnes of ironmaking capacity, said industry consultancy Custeel.com.
Hebei churned out 185.3 million tonnes of crude steel last year, or 22.5 per cent of the country's total. It aims to cut annual capacity by 60 million tonnes by 2017.
More closures are expected to further dampen iron ore prices, which have already dropped to US$54.50 (S$75.14) a tonne this week, their lowest since the Steel Index began publishing prices in October 2008.
