China has issued stricter rules on building new steel production capacity to replace obsolete facilities, the Ministry of Industry and Information Technology said on January 8.
China, the world's top steel producer, will allow one tonne of new capacity to be built for a minimum of 1.25 tonnes of old capacity closed in environmentally sensitive regions, effective this year, the ministry said in a statement.
The new rules are a sign China will continue to deepen its efforts to push supply-side reform and reduce overcapacity in the sector. China is aiming to cut steel capacity by 100 million to 150 million tonnes over the 2016-2020 period, the country's State Council said in early 2016 as part of a five-year plan.
The new guidelines include clearer details on closing capacities to build new plants, based on the size of blast furnace, converters and other facilities to be shut down.
Top steelmaking provinces Hebei and Jiangsu are among the environmentally sensitive regions named in the document.
Steelmakers that plan to build new capacities will have to shut a certain number of existing capacities first, according the statement. Mills that have closed illegal capacities or obtained financial and policy assistance to help shut capacities will not be allowed to build new capacities for replacement, the statement also said.
Regions will also not be allowed to replace low-grade capacities ordered closed as part of a government closure campaign, according to the document, and those that have not met capacity-cut targets will not be allowed to accept capacity relocated from elsewhere.
(Writing by William Gao Editing by Harry Huo)
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