China will push to cut steel production between 2025 and 2026, according to an official document reviewed by Reuters and a source with knowledge of the matter, as it tackles overcapacity that has hit prices and fed a worldwide protectionist backlash.
The world's largest steel producer will strictly curb new capacity and reduce production, the planning document from the industry and environment ministries, among others, showed.
"The steel industry is currently facing excess supply and insufficient effective demand, leading to a supply-demand imbalance that affects development quality and efficiency," it read.
The document did not set targets for output cuts pledged by the government earlier this year. Crude steel output fell 3.1% in the first seven months of this year.
It said China would achieve annual steel output cuts by forcing the closure of outdated and inefficient furnaces and supporting the development of advanced enterprises.
China's industry and commerce ministries did not immediately respond to Reuters' request for comments.
A source familiar with the discussions confirmed the document's accuracy, saying it was a final draft. The source spoke on condition of anonymity as the matter is sensitive.
A 2023 effort to restructure the industry foundered in part because Beijing sent mixed signals to steelmakers about how aggressively it planned to crack down on excess capacity.
The latest plan includes a goal to grow the industry's value-add by 4% a year, invest in new technology and promote steel use in infrastructure and residential construction, raising questions about Beijing's ambitions this time around.
Additionally, Beijing will ratchet up efforts to ensure the supply and price stability of raw materials, including iron ore and coking coal, according to the document.
STEEL EXPORTS
Efforts will also be made to enhance the management of steel exports, the document said, without elaborating.
The lack of detail has sparked discussions among analysts and traders about whether China will stringently crack down on steel exports that evade value-added taxes.
By some estimates, a third of China's exports in 2023 did so. Any serious push to curb the practice would cause steel exports to fall sharply, they say.
China's steel exports have ballooned in the past two years, triggering anti-dumping measures from trade partners, who argue that the flood of cheap Chinese steel products has hurt local manufacturers.
Still, China's steel exports from January to July hit an all-time high, keeping the annual total on track to overtake a record high posted in 2015.
Chinese steelmakers have ramped up exports of steel billet, semi-finished products, in a bid to bypass tariffs, Reuters reported last month.
