Credit controls imposed on China’s debt-ridden steel sector have left many producers unable to afford upgrades needed to survive the country’s war on pollution, and 80mn tonnes of capacity could shut in two years, an industry official said.
Zhao Xizi, chairman of the All-China Chamber of Commerce for Small and Medium-Sized Metallurgical Enterprises, said that in some regions, around 70% of firms could not pay for the renovations needed to meet tough new environmental standards, and with loans to the steel sector cut by around 10% since the beginning of the year, banks have been unable to help.
Poor economic conditions and chronic overcapacity brought Chinese steel prices to their lowest point in 20 years in the first quarter of this year, and a nationwide campaign to tackle pollution has also raised costs and helped put hundreds of plants on the brink of bankruptcy.