China's steel capacity utilisation rate stands at roughly 75%, which is far below the international standard, according to Huang Qunhui, director of the Institute of Industrial Economics of China Academy of Social Sciences (CASS).
Speaking at a press conference hosted by the State Council Information Office, Huang said that the Chinese steel industry was faced with excess capacity between 180Mmt and 240Mmt.
China hopes to eliminate 27Mt of outdated capacity this year.
According to Huang, an effective way to resolve excess capacity is to promote consolidation through mergers and acquisitions. The Chinese government is likely to look favourably on those who engage in such activity and is widely believed to be in the process of developing policy in this respect.