(Yicai) April 13 -- China must focus on studying and establishing a new mechanism for capacity governance in the steel industry based on strictly implementing crude steel output control policies to eliminate the internal competition in the sector, according to the vice president of the China Iron and Steel Association.

It is necessary to prohibit building new production capacity, open up channels for capacity exit, eliminate equipment with outdated technology, serious environmental pollution, and low production efficiency, establish a sound and effective long-term mechanism, and guide companies to o strictly self-regulate, Xia Nong said at the Steel High-Quality Development Conference co-hosted by the China Metallurgical Industry Planning and Research Institute and Jiangsu Yonggang Group on April 11.

This year marks the start of China's 15th Five-Year Plan for national economic and social development and is crucial for the steel industry to deepen its "reduction, optimization, and quality transformation" strategy, Xia said. "We will deepen the implementation of the three major projects of improving product quality and quantity, enhancing carbon efficiency, and the digital and intelligent transformation.

"We will continue to promote plans for the formation of a new mechanism for capacity governance, joint restructuring, iron resource development, and steel application expansion," Xia noted.

The supply-demand imbalance in China's steel industry remains significant, with crude steel production declining 4.4 percent to 961 million tons last year from the previous year, ending below 1 billion tons for the first time in six years, according to data from the National Bureau of Statistics. Steel output was 1.45 billion tons, equivalent to an apparent consumption of 829 million tons of crude steel, down 7.1 percent.

The steel industry is characterized by a prominent imbalance between strong supply and weak demand, increasing the risk of "rat race," so it is necessary to adhere to coordinated efforts on both the supply and demand sides, Wen Gang, director of the steel division of the raw materials industry department of the Ministry of Industry and Information Technology, said at the conference.

China must "curb new capacity, optimize inventory, and regulate output" on the supply side and tap the potential of steel consumption, promote the application of steel structures, advance the upgrading and replacement of steel and supporting materials on the demand side to achieve a high-level dynamic balance, Wen pointed out.

Further expanding the application space of steel materials should be regarded as an important means to solve the supply-demand imbalance in the industry, Xia said. The promotion and application of steel structure buildings will be one of the key areas for expanding the space for such materials, Xia added.

The China Iron and Steel Association is making efforts to promote the integrated development of the steel structure building supply chain and to facilitate collaborative innovation, exchanges, and cooperation, Xia stressed.

Editor: Martin Kadiev