China may cap steel output at 500 mln T -source

BEIJING Wed Feb 18, 2009 5:11am GMT

Quotes

   

BEIJING Feb 18 (Reuters) - China will restrict steel production, force mills to move to coastal regions and ditch inefficient equipment under a draft proposal being discussed by the government, an industry source said on Wednesday.

The draft plan would limit China's crude steel output from 2011 onwards to 500 million tonnes a year. In 2008, China's crude steel production was 500.49 million tonnes.

It would require 40 percent of steelmaking capacity to be located in coastal areas, up from 35 percent now, but the government would put a mechanism in place to help companies assist those losing their jobs.

The plan would also increase the minimum size of blast furnaces from 300 to 400 cubic metres and the minimum size of converters from 20 to 30 tonnes.

The government is expected to finalise the package of measures by the end of this month, the source said.