China will temporarily suspend its steel capacity replacement program, which began in June 2021, potentially limiting the long-term expansion of steel capacity.
China’s Ministry of Industry and Information Technology announced that it would halt the approval process for steel producers seeking to build new plants in exchange for retiring existing capacity. The ministry plans to develop a new approach to manage capacity.
This suspension comes amid a sharp downturn in domestic steel demand, driven by the troubled property sector, a major consumer of steel, leading to price pressures and prompting suppliers to increase exports. This surge in exports has led overseas steel producers to seek protectionist measures to safeguard their local industries.
Analysts are skeptical about the impact of this suspension, suggesting that more drastic measures may be needed to address excess steel capacity in China.
