China says makes better-than-expected progress in overcapacity cuts in steel, coal

China has made better-than-expected progress in cutting overcapacity in the steel and coal sectors amid government efforts to push economic restructuring, the official Xinhua news agency said.

In Hebei Province, where the task in cutting overcapacity is tough, 15.72 million tons of steel production capacity and 14.08 million tonnes of iron were cut in the first half of this year, progressing faster than the same period last year, it reported quoting local authorities.

China’s steel industry has long been plagued by overcapacity, and the government aims to slash steel production capacity by around 50 million tonnes this year.

Aoccrdnig to Xinhua, data from the National Development and Reform Commission (NDRC) showed that 85 percent of the target for excess steel capacity had been met by the end of May, as substandard steel bars and zombie companies were phased out.

“About 128 million tons of backward coal production capacity was forced out of the market by the end of July, reaching 85 percent of the annual target, with seven provincial-level regions exceeding the annual target,” it said.

As a large number of zombie companies withdrew from the market, companies in the steel and coal sectors have improved their business performance and market expectations, Xinhua said.

Lifted by improved demand and lower supply due to government policies to cut steel overcapacity and enhance environmental protection, steel prices continued to pick up, with the domestic steel price index gaining 7.9 points from July to 112.77 in August, and increasing 37.51 points from a year earlier, according to China Iron and Steel Association (CISA).

Companies in the coal sector also gained profits. In the first half, the country’s large coal companies registered total profits of 147.48 billion yuan (about 22.4 billion U.S. dollars), 140.31 billion yuan more than the same period last year, according to the NDRC.


Shekhar Ghosh is consulting editor, He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at


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