Chinese steel mills start to close following government orders
Steel giant Baosteel is set to cut overcapacity by more than 9 million tonnes in the next two years. It might merge with Wuhan Iron & Steel as part of industry’s “restructuring”. China wants drastic cuts to coal-powered heavy industry to boost new activities and limit export losses.
Beijing (AsiaNews) – Following China’s decision to cut overcapacity, Baosteel Group, China's second-largest steelmaker, announced plans to cut 9.2 million tonnes of crude steel capacity.
Last month, both Baosteel and the Wuhan Steel Group had announced that they would restructure, which many observers saw as prelude to a merger.
China’ record exports, often below cost, stem from a probably irreversible crisis. The latter depends not only on a domestic slowdown - which lowered consumption – but also and especially on its steel industry’s abnormal development.
After years of ignoring their own warnings, now Chinese authorities want to reshape the industry. Plans to curb production capacity are increasingly detailed, with clear timetables and plans for redundant labour.
The State-Owned Assets Supervision and Administration Commission on Friday said that China's government-run steel and coal firms (like Baosteel and Wuhan) would cut capacity by about 10 per cent in the next two years, and by 15 per cent by 2020.
The authorities also ordered cutbacks at Tangshan steel plants (Hebei) for environmental reasons.
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