In a significant move to address overcapacity in the steel industry, the Zhejiang Provincial Development and Reform Commission, along with the Provincial Economic and Information Commission, recently released two key documents: "Zhejiang Iron and Steel Industry Resolving Overcapacity Work Program" and "Zhejiang Iron and Steel Industry Cleanup and Rectification Criteria." These initiatives mark the beginning of a comprehensive effort to reduce excess production capacity in the sector.
Over the next five years, Zhejiang aims to cut more than 3 million tons of steel production capacity. The goal is to raise the utilization rate of existing capacity beyond 80% and reduce the number of steel-making enterprises by more than half—approximately 20 companies. This initiative reflects the province’s commitment to restructuring its steel industry and enhancing its long-term sustainability.
Currently, Zhejiang's steel industry has a solid foundation, particularly in stainless steel, where it leads the country. A well-established industrial system centered around rolling processes has been developed. However, under the broader context of China's severe overcapacity in steel production, the industry is facing intense pressure, prompting renewed efforts toward transformation and upgrading.
As part of the plan, the relocation of Hangzhou Steel's mills will be accelerated. In Wenzhou and Lishui, adjustments to the steel industry structure will be pushed forward. The focus is on improving the industry layout, guiding development toward coastal areas and ports, and establishing advanced steel industry bases in cities like Wenzhou, Huzhou, Jiaxing, Lishui, and Quzhou. These bases will emphasize technological innovation, distinct features, and competitive dislocation.
A long-term mechanism for managing overcapacity in the iron and steel sector is being established, aiming to significantly boost the industry's competitiveness. The plan also includes six key measures: strictly controlling new steel production projects, conducting a thorough cleanup of illegal construction projects, rectifying built-in illegal production capacity, promoting the optimization of industry layout, encouraging innovation and development among steel enterprises, and supporting structural adjustments such as mergers, acquisitions, and technological upgrades.
For instance, in enhancing the innovation capabilities of steel companies, Zhejiang is pushing the use of high-strength steel bars with a strength of 400 MPa or higher as a key driver for upgrading construction steel products. Targeting the needs of downstream industries such as machinery, automotive, shipbuilding, high-speed rail, home appliances, and power, the province encourages enterprises to develop high-end steel products, including green, low-carbon, energy-efficient, and environmentally friendly materials, as well as high-performance special steels. This shift not only supports industrial upgrades but also aligns with national goals for sustainable development.
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