According to data from the National Energy Administration, China has beaten the annual de-capacity target in the steel industry as of the end of October by eliminating 50 Mtpa surplus and outdated steel capacity, adding to a total cutbacks of 110 Mtpa during the two years’ supply-side structural reform. The overcapacity cutbacks significantly improved supply-demand fundamentals in the sector and help loss-making mills swing back to profit. Data of the China Iron and Steel Association showed that the average profit margin of large steel enterprises increased 4.18% in the first nine month from a year ago. Regarding the coal industry, China has achieved the 2017annual de-capacity target of over 150 Mtpa two months ahead of schedule; while in 2016, over 290 Mtpa of overcapacity has been kicked out, 50 Mtpa more than planned. Looking ahead, an official with the Ministry of Industry and Information Technology noted that 2018 is a key year to protect the de-capacity achievements the country got in steel and coal industries and that China will continue to deepen the de-capacity drive in the two sectors and shut down “zombie enterprises” in accordance with the relevant laws and regulations.
