China to conduct inspections to prevent poor-quality steel or excess production

Beijing. April 3. Silkroadnews - China will conduct inspections to prevent the production of low-quality steel or its excess production from May to June, Xinhua reports.
The purpose of the inspection is to prevent metallurgical companies from violating the ban on low-quality steel production using scrap metal or restoring the excess capacity that has been eliminated, said Shui Hengyong, a staff member of the National Development and Reform Commission.
The audit will be carried out at inter-ministerial level involving staff of 25 government agencies and industry associations. .
This year, China plans to reduce steel production by 30 million tons.
The government’s efforts will be aimed at getting rid of “zombie-firms” in the metallurgical industry, Shui said.
According to the official, the work will also be carried out to assist workers engaged in excessive production, working with debt obligations, speeding up the restructuring and modernization.
Over the past few years, the government has been paying great attention to cutting over capacity in bloated sectors, such as steel and coal production, as production gluts ate into corporate profits and dragged economic growth, the report reads.
As capacity declined, steel prices rose last year, leading to improved profits for producers and luring some to resume the eliminated capacity.
In 2016 and 2017, the country reduced more than 120 million tons of steelmaking capacity, which is 80% of the planned reduction of 150 million tons as targeted by the government for the period 2016-2020. Last year the country also stopped production of 140 million tons of low-quality steel from scrap metal.