China Struggles to Limit Steel Production

The Chinese steel industry is running into some issues with its steel production. The government is struggling to adopt new policies limiting steel production over the next few months. China’s steel output has been remarkably high in 2012, despite declining prices, and oversupply is largely to blame for these lower earnings.

Some officials, such as Zhang Dechen, head of the raw materials department at the Ministry of Industry & Information Technology (MIIT), believe that it would be most prudent to wait for the economy to influence the steel industry, rather than trying to influence the steel industry by limiting steel production.

Some mills have been going in the opposite direction, however, replacing smaller blast furnaces with bigger ones, and continuing production after inspections have been completed. These mills are sometimes effective in stimulating economic growth by supplying steady employment, and officials are reluctant to shut them down, even temporarily.

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