China would “strictly prohibit” any addition of steel producing capacity in 2018 as the government looks to achieve the upper end of its de-capacity target set out in the 13th five-year plan in advance.

China has seen 115 million mt of steel capacity cut during the first two years of the 13th five-year plan, while the upper end of the target is 150 million mt, according to a document released by the Ministry of Industry and Information Technology (MIIT) on Thursday January 4.

According to SMM research, we have seen 131 million mt of closure in 2016 and 2017. 

The document was aimed at curbing steel mills’ intention to expand against the backdrop of higher steel prices, local media reported. China’s 13th five-year plan spans from 2016 to 2020.

Pressure on environmental protection would continue to be the main measure for China’s steel de-capacity plan, and the industry is expected to see a total of 45 million mt of capacity cut in 2018, according to an analyst at Guangfa Securities. Production is likely to see a cut of some 22.97-37.55 million mt, the analyst added. 

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