China aims to eliminate 30 million tonnes/year of steel and 150m t/y of coal production capacity in 2018, according to Xinhua. Over 2016-2017 China has cut more than 115m t/y of registered steel capacity, leaving only 35m t/y of its 150m t/y target to achieve before 2020, Kallanish notes.

Based on published local governments' steel capacity elimination goals (see Kallanish 28 February), a total of around 23m t/y of steel capacity has been detailed in the targets of six provinces. The six provinces, Hebei, Jiangsu, Shandong, Anhui, Shanxi and Yunnan, account for 54.63% of national official crude steel output, suggesting the annual 30m t/y capacity cut goals should be quite easy to achieve.

Apart from the normal steel overcapacity elimination campaign, China claims that last year it also removed around 140m t/y of mislabelled steel capacity. Although official national crude steel output still grew in 2017, actual steel production should have dropped slightly once unregistered steel production is factored in. The continuing steel capacity eliminations and more frequent air pollution restrictions will help support sentiment this year, as long as demand is strong enough.