China’s Ministry of Industry and Information Technology (MIIT) has released draft regulations aimed at tightening control over steel production capacity and accelerating the industry’s green transition.
The proposal would prohibit new steel projects outside approved industrial parks within the Yangtze River Economic Belt and restrict capacity transfers in key regions. Areas with strict environmental goals would be barred from expanding total steelmaking capacity, while transfers between key or from non-key to key regions would also be banned.
Only smelting equipment included in the official 2016 de-capacity list could be used for capacity replacement. Outdated, subsidized, or unapproved facilities, such as induction furnaces, would be excluded.
The draft also raises the minimum capacity replacement ratios, requiring at least 1.5 tons of old capacity to be scrapped for every ton added, or 1.25 to 1 in mergers completed after June 2021. Limited exceptions would apply to on-site upgrades, high-end specialty steel projects, and developments in Qinghai and Xizang.
MIIT said the rules aim to strengthen oversight, promote low-carbon technologies such as electric arc furnaces and hydrogen metallurgy, and prevent a resurgence of overcapacity while supporting cleaner steel production.
