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China needs more efforts in steel capacity cuts in H2

(Xinhua) Updated: 2016-07-26 10:41

BEIJING - China reduced steel capacity by 13 million tons in the first half of 2016, about 30 percent of the planned cuts for the whole year, and capacity cuts will intensify in the second half, a senior official said Monday.

The progress in the first half of this year "was in line with our expectations," and "we remain confident that we will fulfill our capacity cut targets for 2016," Feng Fei, vice minister of industry and information technology, told a press conference.

China aims to cut steel production capacity by 45 million tons in 2016.

In the first half of this year, work focused on breaking down tasks to allocate them to provincial-level regions, and the formulation of supportive measures for steel capacity cuts, according to Feng.

In the second half, implementation of capacity cuts and supportive measures will speed up, he said.

China is the world's largest steel producer and consumer. The steel industry has been plagued by overcapacity for years. It has been felt even more in the past two years as demand for steel has cooled.

Steel producers experienced their worst year in 2015, with combined losses in main business soaring 24-fold from 2014 to over 100 billion yuan ($15 billion).

China has shut down steel plants with a total capacity of over 90 million tons over the past five years and plans to reduce the landscape further by an additional 100 million to 150 million tons by 2020.

Feng said China's crude steel production fell 1.1 percent year on year in the first half of this year, and operational conditions of the steel sector reported improvement.

According to the China Iron and Steel Association, China's large steel plants saw improved profits and narrowed losses in the first five months of this year thanks to destocking efforts.

Major iron and steel enterprises raked in 8.736 billion yuan in the Jan-May period, up over 700 percent year on year while fewer firms reported losses, the association said.

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