China has revises its approval system for new steel mills as a sharp drop in demand has hurt the sector’s profits and boosted exports.
The rules Beijing has used for years to allow companies to build steel mills on condition that they reduce a certain amount of existing capacity will no longer apply from Friday, and a replacement program will be put in place, the Ministry of Industry and Information Technology said in a statement.
With steel demand down more than 10% since 2020, many analysts expect the industry to shrink to keep pace with an economy that has become less reliant on construction.
China’s steel exports have surged this year to their highest level since 2016, a sign that smelters are struggling to find markets for their 1 billion tonnes of annual output.
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