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Small steel enterprises set for death sentence

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-07-13 15:12
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The Ministry of Industry and Information Technology (MIIT) released new regulations Monday at the National Steel Industry Forum held in Dalian city of Northeast China's Liaoning province, setting new requirements for China's steel mills as a step to curb overcapacity of the industry, the New Business Daily reported Tuesday.

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The regulations set limitations on steel enterprises in environmental protection, energy consumption and capacity, to further promote consolidation in the industry, the paper said.

Zhou Xizeng, top analyst with Citic Securities, said China Iron and Steel Association's 70 members produced 80 percent of the industry's output. The remaining small and medium-sized steel enterprises could hardly meet the requirements and may not escape the fate of elimination, according to the regulations.

In May, MIIT urged commercial banks to reduce or cease extending loans to steel enterprises that ignored market demands and blindly expanded production, as part of a strategy to meet the target of energy efficiency and emission reduction in the 11th Five-Year Plan (2005-2010).