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: the "Zhejiang Iron and Steel Industry Resolving Overcapacity Work Program" and the "Zhejiang Iron and Steel Industry Cleanup and Rectification Criteria." These initiatives mark the beginning of a five-year effort aimed at reducing steel production capacity by more than 3 million tons, increasing the utilization rate of existing capacity to over 80%, and cutting the number of steel-making enterprises by more than half—approximately 20 companies.
Currently, Zhejiang's steel industry has a solid foundation, particularly in stainless steel, where it holds the top position nationwide. The province has developed a robust industrial system centered around rolling processes. However, under the broader context of China’s severe steel overcapacity, the industry is facing intense pressure, prompting renewed efforts for transformation and upgrading.
As part of the plan, Zhejiang will push for the relocation of Hangzhou Steel's facilities, restructure the steel industry in Wenzhou and Lishui, and optimize the industry layout by shifting operations toward coastal areas and ports. The goal is to establish advanced steel production bases in cities such as Wenzhou, Huzhou, Jiaxing, Lishui, and Quzhou, focusing on high-tech, specialized, and competitive sectors. A long-term mechanism to manage overcapacity is being put in place, with the aim of significantly boosting the industry’s competitiveness.
The implementation strategy includes six key measures: strictly controlling new steel production projects, conducting comprehensive cleanups of illegal construction projects, rectifying existing illegal production capacities, promoting industry layout adjustments, enhancing innovation and development capabilities of steel enterprises, and supporting structural reforms through mergers, acquisitions, and technological upgrades.
For instance, to boost innovation, Zhejiang is encouraging the use of high-strength steel bars (400 MPa and above) to upgrade construction steel products. It also aims to improve steel quality used in downstream industries like machinery, automobiles, shipbuilding, high-speed rail, home appliances, and power generation. Companies are being urged 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 aligns with national sustainability goals but also positions Zhejiang’s steel industry for long-term growth and global competitiveness.
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