China is working on plans to reduce excess capacity in steel production as the country faces "severe oversupply," Bloomberg reported, citing Wuhan Iron & Steel Group general manager Deng Qilin. The central government may put forward detailed plans on how to close obsolete mills, push mergers and cut the number of iron ore importers by year end, Deng said. "The government will impose strict measures to effectively close outdated mills and boost consolidation," Deng said. "We bigger players will surely benefit from such a move." Steel prices in China, the world’s biggest producer of the metal, have dropped 23% since hitting a 10-month high on August 4. Overproduction has offset rising demand spurred by the government’s stimulus spending.