China Unveils its Steel and Coal Production Cut Plans

China which is facing excessive steel overcapacity especially since last one year has finally announced its plan to cut 150 MnT of steel capacity and 500 MnT of coal capacity in time span of 5 years.

China has been exporting steel at cheaper rates which has severely impacted the domestic steel industries of various countries including US ans Europe.

Country’s total exports in first five months of 2016 stood at 46.32 MnT which have although fallen by 6.14% against corresponding period of previous year, are still much higher than the steel exports of other countries.

Fund for Unemployed

The planned production cut in coal and steel sector will however lead to the unemployment of 1.8million people. For this the Chinese government has set up a fund of USD 100 billion in order to assist workers who will be losing their jobs due to this industrial restructuring. Allocated for five years, this fund will cover workers’ training and job seeking.

Increasing Trade Barriers

Already From 2011 to 2015, 91 MnT of outdated capacity in the iron industry and 94.8 MnT in the steel industry had been eliminated by Chinese government.

With growing steel exports from China, trade walls are being erected by various countries. US is already on its way to impose hefty anti-dumping duties on CRC imports from China, despite threat from China to take US to WTO.

Not only US, but even other countries in Europe, India and South East Asian countries are setting up various trade barriers against Chinese steel imports.

China’s Production Decapacity Plans