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China to further tighten steel capacity swapping rules

Add Time:2019-05-10 19:14:00 Clicks:
Reuters reported that China’s top economic regulator National Development and Reform Commission announced that China will tighten approvals of steel capacity swapping between companies and ban all new steel capacity in any form, in order to streamline the sector. The announcement follows illegal capacity expansions approved by local governments under the cover of capacity swaps, where companies move capacity between different regions to reduce the concentration of plants in polluted industrial areas. The new facilities have undermined Beijing’s efforts to reduction pollution and reduced steel capacity. NDRC said “The central government will carry out inspections on capacity cuts to prevent closed projects from reopening.”

Additionally, China will control steel-making capacity in key pollution-control areas, including the Beijing-Tianjin-Hebei region and the Yangtze River Delta, by imposing more strict environmental, energy, land and water usage standards

The NDRC also said it will encourage mergers and restructuring in the steel, coal and coal-fired power sectors this year, and will eliminate all so-called zombie firms, companies with outdated equipment and debt that are no longer competitive, by forcing them to shut down or merge with other companies by 2020.

China has eliminated more than 150 million tonnes of crude steel capacity in the past three years. There are around 980 million tonnes remaining, nearly half of the world’s total.

Since 2016, China has disposed of more than 1,900 zombie firms and heavily-indebted companies.

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