21 Century Business Herald reported quoted Chinese premier Mr Wen Jiabao has clearly declared in the new year start in Qingdao that Beijing is mapping out revitalization plans to bail out the struggling ten key sectors like steel, automotive, shipbuilding, textile and non-ferrous etc. and plans for steel and auto sectors have been completed.
According to the report, state council has yet to publicize the ten reviving plans. And Mr Li Xinchuang sub-dean of China Metallurgical Industrial Planning & Research Institute, and the key editor in steel sector"s revitalization plan, told reporters that the plan will go closely in tandem with the national adjustment pace, taking into consideration both the steel industrial policy released in 2005 and the severe market conditions at the moment.
Mr Li said "The plans will cover the three years ahead, and mainly focus on maintaining growth, expanding domestic demand and readjusting industrial structure. The government bodies are also advised to release related policies to help steel producers glide out of the plight. He said that the threshold for obsolete capacity elimination is set to be raised up since the country has been plaguing with excessive capacity over the years."
Mr Li said "The threshold for furnace accession will keep unchanged at 1,000+ cubic meters; however, the closure criterion for furnaces would be raised up to below 400 cubic meters; while those for converters & electric ovens lifts up to 30 tonnes to strengthen the outdated capacity termination. He said that and China steel industry would see 100 million tonnes obsolete capacity out if the policies are strictly implemented.
He added that "The establishment and optimization of withdrawal mechanism becomes the highlight in the revitalization plan, and which is united with the backward capacity elimination. Subsidy standard should be established for those quitting the market.”
Mr Jia Liangquen Mysteel chief analyst said "The quit mechanism indicates that China is uniting market and administrative measures to realize industrial structure readjustment, which is the way directed by the industrial policies. He said that the subsidy mechanism is reasonable for those medium-and-small-sized steel mills choosing to quit the market, since their products also have some markets and they cost a lot in entering the sector.”