China's plan to close 100 million-150 million tonnes of poorly performing steel capacity in the next five years is unlikely to be enough to drag the stricken sector out of the doldrums, a parliamentary delegate and steel mill head told Reuters.
As it steps up its efforts to deal with price-sapping capacity gluts in industrial sectors, Beijing has promised to force through the closure of hundreds of "zombie" steel mills and will also make funds available to deal with laid-off workers.
But Zhang Wuzong, head of Shandong province's Shiheng Special Steel Group, said the targets laid out in an action plan in February would not be sufficient to tackle a surfeit of capacity estimated at around 400 million tonnes, especially as domestic steel demand continues to decline.
"China's steel production is actually 800 million tonnes, and it should be at the 1.1 billion or 1.2 billion level, so getting rid of 100 million or 150 million isn't any good - 300 million or 400 million is more appropriate," he said.
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