Chinas Ministry of Industry and Information Technology
(MIIT) aims to shut down nearly 9.75 million tonnes of obsolete
iron and steelmaking capacity by the end of September and
dismantle the facilities entirely by the end of this year.
A list of outdated
facilities to be phased out this year in 19 industries,
including iron and steelmaking, was published on the
ministrys website late July 25.
A total of 24
steelmakers have been instructed to phase out a combined 6.98
million tonnes of obsolete capacity, while nine iron works have
been told to shut down 2.77 million tonnes. Eastern
Chinas Shandong province accounts for the bulk of the
outdated capacity to be shut down at 2.28 million tonnes, or
23.4 percent of the total.
"The listed capacity
is only a very small part of all the outdated iron and
steelmaking capacity in the province. Mills will just replace
the obsolete facilities with larger ones, so the overall
capacity will continue to increase and weigh on prices in the
long term," a Shandong-based market observer said.
analyst said that many mills on the list had already suspended
production at the facilities or idled them, so the impact on
the steel market could be limited.
"The capacity closure
is too small compared with the capacity expansion in the
countrys steel industry," a Jiangsu mill source said.
A ministry official
acknowledged that there is still a long way to go in phasing
out outdated capacity, but said the ministry is working to
solve the problem step by step. "We will release a second list
later this year, hopefully in September," he told AMM
sister publication Steel First.
MIIT announced in April that it planned to phase out 2.63
million tonnes of ironmaking capacity and 7.81 million tonnes
of steelmaking capacity in 2013.
A version of this article was first published by AMM sister
publciation Steel First.