On October 15, the State Council issued a guideline on resolving the problem of serious overcapacity. The guideline said that while resolutely curbing the blind expansion of production capacity, it will also clean up and complete the construction of illegal production capacity and eliminate and eliminate backward production capacity. It also proposes to close down another 15 million tons of iron and 15 million tons of steel by the end of 2015, on the basis of completing the targets set in the 12th Five-Year Plan for shutting down outdated production facilities one year ahead of schedule.
Over the past decade, high profits attracted numerous capital into the steel industry and promoted the construction of iron and steel projects, steel production capacity continued to grow rapidly. In recent years, due to the profound impact of the international financial crisis, the international market has remained sluggish, the growth of domestic demand has slowed down, and the problem of oversupply in the steel industry has become increasingly prominent. Data from the Opinions show that at the end of 2012, China's steel industry capacity utilization rate was only 72%, significantly lower than the usual international level.
'We hope that through five years of efforts, the scale of production capacity in industries with overcapacity, such as steel, will be basically reasonable, and the utilization rate of production capacity will reach a reasonable level,' the guideline said. Substantial progress was made in merger and reorganization, and profitability returned to a reasonable level; A long-term mechanism has been established. The introduction of the "opinion", can clearly feel that the expansion of production capacity firmly said "no". The guideline calls for "resolutely curbing the blind expansion of production capacity". The construction of new production capacity projects is strictly prohibited. "Local governments and departments shall not approve or record new production capacity projects in industries with severe overcapacity in any name or in any way, and relevant departments and institutions shall not handle land (sea area) supply, energy assessment, environmental assessment approval and new credit support and other related businesses. There are also measures to deal with illegal projects under construction.
In addition, the Opinions also proposed to resolutely eliminate backward production capacity and guide the orderly exit of production capacity. By the end of 2015, another 15 million tons of iron and 15 million tons of steel will have been closed down, on top of meeting the targets set in the 12th Five-Year Plan for shutting down outdated production facilities one year ahead of schedule.
Regarding the steel industry, the Opinions said, the focus is on promoting the restructuring of the steel industry in Shandong, Hebei, Liaoning, Jiangsu, Shanxi, Jiangxi and other regions, giving full play to the enthusiasm of local governments, integrating decentralized steel production capacity, promoting the relocation of urban steel mills and optimizing the industrial layout. And put forward, "the total capacity of compressed steel 80 million tons or more" requirements. At the same time, for high strength steel bar requirements to accelerate the promotion of high strength steel bar product classification certification and identification management, and its application also put forward the corresponding requirements.
The State Council said resolving the problem of serious overcapacity is the priority of promoting industrial restructuring at present and for a period to come.
