Overcapacity reduction targets raised for 2014

In a new push to fight pollution and accelerate industrial upgrading, Chinese authorities have upped the target eradication of outdated steel production capacity to 28.7 million metric tons.

The Ministry of Industry and Information Technology announced new obsolete capacity reduction targets on its website on Thursday.

Compared with numbers released in a March government report delivered by Premier Li Keqiang, the new goal is 1.7 million tons higher.

Zhang Tieshan, a senior analyst from industrial information provider Mysteel.com, said Beijing faces such serious environmental problems that policies to eliminate obsolete steel mills had to be revised.

Hebei province is the biggest steel producer in China with an annual capacity of more than 200 million tons. It accounts for a quarter of the national capacity.

According to the State Council's plan, China will eliminate 80 million tons of outdated steel capacity by 2017. Of that, Hebei was required to cut 60 million tons.

"A number of small steel mills were shut down recently under the administrative order," said Zhang. "The local government has taken actions to reach the goal."

He noted that water is also an issue for Beijing's environmental protection and that steel mills are large water consumers.

According to the local government, between 2011 and last October, Hebei pulled down 10 blast furnaces and 16 converters belonging to eight companies, which has reduced steel smelting capacity by 6.8 million tons and iron smelting capacity by 4.56 million tons.

This February, the province took down another 16 blast furnaces, cutting steel capacity by another 1.49 million tons.

The ministry also announced that the country will shut down 50.5 million tons of cement capacity this year, higher than the 42 million ton goal announced in March.

Meanwhile, China plans to eliminate 420,000 tons of aluminum capacity and 512,000 tons of copper production capacity by the end of this year.

To help small companies that must shut down, the government will provide subsidies for staff settlement, the Ministry of Finance announced on Wednesday.

Seven industries-namely, steel, nonferrous metals, construction, manufacturing, petrochemical, light industry and textiles-will be the major beneficiaries of the subsidies, according to the ministry.

Utilization rates in steel, aluminum, cement and shipbuilding are all below 75 percent, the industrial ministry announced at a news conference last month. It said that in March, prices of domestic industrial products had been falling for 25 consecutive months.