* Mills should brace for tough new measures - NDRC official
* 'Don't play wait and see' during crackdown - official
* China to keep focus on capacity cuts, not output curbs
By Muyu Xu and David Stanway
BEIJING, April 14 China's steel mills need to
prepare for an even tougher assault on overcapacity this year as
the government bids to make "fundamental" progress in reforming
the sector, an official from the country's top planning body
told an industry meeting.
"Although capacity reduction targets were achieved early
last year, the overcapacity problem in China's steel sector has
not fundamentally been improved," said Xia Nong, supervisor at
the industry department of the National Development and Reform
Xia described 2017 as a "year of attack" and said the state
would make even bigger efforts, warning a gathering of industry
officials and executives in Beijing on Thursday that they should
plan in advance. Officials at the meeting insisted last year's
65 million tonnes of capacity cuts were already substantial.
"Do not delay, don't play wait and see," Xia said.
The world's biggest steel producing country vowed last year
to reduce annual crude steel capacity by 100-150 million tonnes
within three to five years.
It aims to close 50 million tonnes this year, and has also
vowed by the end of June to completely eliminate low-grade steel
furnaces, responsible for as much as 100 million tonnes of
illegal substandard production every year.
"We don't permit leaving things to chance, and we don't
permit lying low during the crackdown on low-grade steel
capacity," Xia said.
Environmental group Greenpeace estimated earlier this year
that actual capacity in operation increased by 35 million tonnes
in 2016, with much of the closure programme focusing on already
China's steel output increased 1.2 percent to 808.4 million
tonnes in 2016, and Greenpeace said the country needed to
consider cutting production rather than capacity in order to
rein in the sector.
Luo Tiejun, supervisor of the raw materials department at
China's Ministry of Industry and Information Technology,
rejected that notion, saying Beijing was still committed to
letting the market decide production levels.
"China will only cut steel capacity and will not set a level
for output," he said. "It is wrong to say that China's steel
capacity is increasing."
However, the central government has already launched an
investigation into steel firms in the city of Tangshan in Hebei
province, focusing on mills that have "cut capacity but actually
Tangshan, home to dozens of private steelmakers, produced
88.3 million tonnes of steel in 2016, up 6.8 percent on the year
- and more than the whole of the United States.
Steel prices rose 76.5 percent in 2016, boosting profit
margins and helping mills turn losses into gains, according to
data from the China Metallurgical Industry Planning and Research
With output up 6 percent in the first two months this year,
industry watchers say the price recovery may have encouraged
some mills to overproduce.
(Reporting by Muyu Xu and David Stanway; Editing by Kenneth