China’s steel sector is exploring the possibility of compensating companies that close outdated and inefficient steel plants, as part of the government’s strategy to curb the nation’s massive steel production. Qian Gang, Chairman of Citic Pacific Special Steel Group Co., disclosed that the industry is considering implementing a compensation scheme to incentivize the closure of older facilities.
According to the report, the China Iron and Steel Association (CISA), which represents steelmakers, began consulting with mills earlier this year to discuss the proposal.
However, representatives from both Citic Pacific and CISA were unable to provide further details. Citic Pacific did not confirm Gang’s statement, and CISA’s spokesperson did not respond to a request for comment. Additionally, the report did not clarify who would fund the compensation or the current stage of the discussions.
This move comes after China’s economic planning agency announced earlier this month its intention to push steelmakers to scale back production in order to address the significant surplus in the market and help restore profitability. The steel industry has been hit particularly hard by the downturn in the property market.
Speculation in the market suggests that the Chinese government may mandate production cuts of up to 50 million tons. Despite ongoing efforts to reduce output, the country’s steel production has stubbornly remained above 1 billion tons, making China the world’s largest producer and consumer of steel.
Related topic:
Congo Considers Long-Term Measures for Cobalt Export Ban
India Proposes 12% Tariff on Steel Imports Amid Global Surge
South Korea Tightens Metal Import Scrutiny Amid U.S. Tariffs
