Site icon China Economic Review

Steel firms creatively 'cut' overcapacity

Efforts to trim excess capacity seem to have paid off as the steel industry appeared to have met more than 80% of its annual target by September and steel prices rebounded. This may sound like good news, but according to Caixin it does not necessarily mean that the sector is set for a recovery any sooner than expected.  Steel producers responded to pressure by adopting ingenious measures to nearly double the amount of capacity trimmed by counting long-closed production lines as newly reduced overcapacity in a bid to conjure up more-attractive figures. Some of these “dead” steel factories had ceased production for as long as three years. In one survey, industry-watcher CUSteel estimated that 71% of the combined annual targets of 24 provincial governments involved long-shuttered mills.

Exit mobile version