According to Mr Chi Jingdong vice secretary general of China Iron & Steel Association the steel support plan approved by the State Council is not an expedient measure amid current market meltdown and the plan would benefit the industry growth in the long term.
Spooked by global economic crisis, domestic steel price has plunged by 40% and the overall sector has been plunged into loss, forcing production cutback at many mills. Beijing has unveiled the help plan to boost the pillar industry against such backdrop.
The support package aims at development both in the short term and long term, and is very viable, he said. More stringent measures have been adopted in the plan to eliminate backward capacity, and blast furnaces with capacity of less than 400 cubic meters instead of previous 300 cubic meters would be shut down and the converters and EAFs below 30 tonnes instead of previous 20 tonnes will be closed.
Meanwhile, the authority has also set up an existing system for the inefficient capacity, which would make the plan more effective and feasible. Chi estimates that according to the new criteria, an additional of 70m tons of ironmaking capacity and 25 million tonnes of steelmaking capacity will be shuttered.
Special funds will be set aside from the central budget to encourage technological advancement of the sector, readjustment of products mix and improvements of product quality, and steel quality is expected to make a breakthrough in two to three years, according to the plan.