BEIJING (Reuters) - China's Baosteel Group said it would cut steel production capacity by 11 million tonnes over 2016 and 2017, according to an announcement posted on its website on Friday, ahead of an earlier target.
The company previously set a goal in July of cutting 9.2 million tonnes of excess capacity from 2016 to 2018. However, Dai Zhihao, president of Baoshan Iron & Steel <600019.SS> said in August that the parent Baosteel Group would cut 12.20 million tonnes of capacity through 2018, in line with Beijing's efforts to curb oversupply.
China has speeded up capacity cuts to push forward supply-side reforms designed to reduce oversupply in the bloated steel sector. The reductions also help to quell trade disputes with the U.S., Europe and other countries that allege China is dumping cheap steel on the world market.
The China Iron & Steel Association (CISA) said last week that China is on track to hit its 2016 target for crude steel capacity cuts of 45 million tonnes by late October, with extra reductions expected in the last two months of the year.
Baosteel Group has recently begun its takeover of Wuhan Iron & Steel Group, forming Baowu Steel Group, now China's biggest steelmaker and the world's second-largest after ArcelorMittal.
The capacity closures include some already shuttered converters owned by Baoshan Iron & Steel <600019.SS>, two blast furnaces at its stainless steel plant in Shanghai and the Baicheng plant of Bayi Steel in the Xinjiang Autonomous Region, it said in the statement.
Meanwhile, Baosteel Group has also shut some capacity at Shaoguan Iron & Steel in southern Guangdong province and some others in Jiangsu province.
All the capacity that has been shut will be dismantled by the end of 2017, according to the statement.