China will secure a cut in crude steel production in 2021 and will launch a nationwide investigation into the cuts in steel capacity from 2016 as the country strives to meet its emission reduction targets.
China, the world's leading steel producer, has launched a campaign to eliminate obsolete and overcapacity in the steel industry since 2016.
Steel imports rose 64% last year and billets nearly 500%, but steel production in the country also hit a record high as industrial activity revived after the pandemic halted.
China's National Development and Reform Commission (NDRC) and the Ministry of Industrial Information Technology (MIIT) said in a statement that they will jointly investigate excess steelmaking capacity and construction and production of steelmaking projects.
"Since 2016 ... the reduction in steel production capacity has led to significant results, but some deep-seated contradictions have not been resolved in principle," the authorities said in a statement.
They also said they would foster quality development rather than quantity after some companies have the "impetus" to blindly build steel projects as industrial production recovers from the impact of the pandemic, undermining capacity cuts.
China says it has cut production capacity by 150 million tonnes and 140 million tonnes of low-grade steel over the past five years. However, its annual crude steel production was a record for four consecutive years at 1.065 billion tonnes in 2020.
In a statement, the checks will include self-correction by each local government, on-site checks and a consolidated report.
The authorities will focus on cutting steel production from outdated plants with poor environmental performance and ensure that steel production declines in 2021 from the previous year as China strives for long-term carbon neutrality.
China's leading steel city, Tangshan, has already called on bar producers to cut production by 30-50% this year, bringing rebar and hot rolled coil futures prices to a record high of over 5,000 yuan per tonne.
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