China plans to tighten steel capacity swap program

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    BEIJING- China is planning stricter rules for steel capacity swaps, which were stopped at the beginning of the year, and will also expand the key areas in which they are used, according to a notice issued by the Jiangsu Iron and Steel Association.

    The world’s top steel producer has been working for years to cut manufacturing capacity to reduce oversupply and shutter older, lower spec, and more highly polluting plants.

    Swaps are designed to allow firms wishing to start new plants to exchange fresh capacity for closures elsewhere.

    However, Beijing called off new swaps in January after finding some Chinese steel mills had expanded production capacity under the guise of using the program.

    The draft guidelines for the revised plan have expanded the number of key polluted regions, which typically face stricter regulations, to include Fenwei Plain and other polluted cities in Shandong and Henan provinces.

    The proposal is for the capacity swap ratio in the key polluted areas to be no lower than 1.5 to 1, against 1.25 to 1 in the previous version introduced in 2018. — Reuters