Chinese steelmakers discuss compensation for closing outdated facilities

The Chinese steel industry plans to create a compensation scheme for the closure of outdated and less efficient facilities amid government efforts to reduce steel production in the country. This was stated by Qian Gang, Chairman of the Board of Citic Pacific Special Steel Group, Bloomberg reports citing local media.

As noted, the China Iron and Steel Association (CISA) began consultations with the mills on this plan earlier this year. The company and the association did not comment on the issue. It is not yet clear who will pay the compensation and at what stage the discussions are.

In March of this year, the National Commission for Development and Reforms announced plans to restructure the steel industry by cutting production in the sector, without providing more specifics. The market speculated that steel production could be cut by 50 million tons per year.

In January-February 2025, the country’s steel industry reduced steel production by 1.5% compared to the same period in 2024, to 166.3 million tons. The decline in production contradicted the expectations of some analysts who predicted growth, citing higher exports.

As GMK Center reported earlier, Chinese steel companies reduced steel production by 1.7% year-on-year in 2024, producing 1.005 billion tons. This is the lowest figure in the last five years. Experts noted that last year is likely to be the last year when steel production in the country exceeded 1 billion tons.