September 30 was the final day for the elimination of backward industrial production capacities, according to China's Ministry of Industry and Information Technology (MIIT). Indeed, many provincial governments in China have announced that they had have completed the task of eliminating dated production capacity.
Nevertheless, despite the implementation of the central government's policy on the elimination of backward production capacities, the overall capacity of China's iron and steel industry may not fall as many people have anticipated. For example, one private steel enterprise in the city of Wuan in Hebei Province removed two 450 m3 blast furnaces in February this year, but then established a new blast furnace of 1,250 m3 capacity, thereby exceeding the previous annual capacity.
Song Jijun, vice president of the Metallurgical Industry Association of Hebei Province, has commented that some enterprises in the areas of Tangshan and Wuan in Hebei Province are building new blast furnaces, while it is expected that a number of new steel capacities will have been created by this time next year. He also said that currently hot rolled plates are the main products for which overcapacity is observed, while market demand for construction steel products - the products mainly affected by the elimination of dated capacities - remains strong. This creates an imbalance between supply and demand, Mr. Song said.