The capacity-reduction targets for the steel and coal sectors will be met ahead of schedule.

On the 25th, Xu Kunlin, Deputy Secretary-General of the National Development and Reform Commission, revealed that as of the end of September, both the steel and coal industries had already completed more than 80% of their annual capacity-reduction targets. In some regions and among central enterprises, the year’s targets have even been met ahead of schedule. Based on the current pace of work, it is expected that the nationwide task of phasing out excess steel and coal capacity for 2016 will be accomplished ahead of schedule.

　　According to reports, the steel and coal industries are currently enjoying favorable market conditions, with prices rebounding and overall performance—covering production, safety, and operations—improving markedly in a relatively short period. In the third quarter, national coal consumption turned positive, rising approximately 0.5% year on year, while the composite price of four major steel products increased by 30.5% compared with the beginning of the year. During the first eight months, member companies of the China Iron and Steel Association reported profits of RMB 21.47 billion, reversing a year-earlier loss and posting an additional RMB 39.35 billion in earnings. Meanwhile, large-scale coal enterprises recorded profits of RMB 22.48 billion, up 15% year on year. As operating performance continues to improve, the financing environment for steel and coal firms has also eased, leading to noticeable relief from longstanding issues such as tight cash flow, insufficient investment in safety, and delayed or unpaid wages.

　　According to reports, among the 146 coal‑mining projects that commenced construction without prior approval, all have been suspended—except for a few in certain regions where operations were maintained due to essential public‑service needs. Furthermore, more than 300 steel‑related enterprises and coal mines found to be in violation of laws or regulations have undergone rectification and been dealt with in accordance with the law. Of the over 6,000 small coal mines nationwide with an annual capacity of 300,000 tonnes or less, more than 2,600 have already been designated for closure as part of capacity‑reduction efforts.

　　Analyzing the reasons behind the accelerated pace of capacity reduction in the coal and steel sectors, Xu Kunlin stated that local governments have gradually established orderly mechanisms and institutional frameworks for phasing out excess capacity. Efforts have been steadily intensified, progress has markedly quickened, and tangible results are beginning to emerge. Moreover, a series of measures—including special inspections, progress monitoring and reporting, cautionary talks, and cross‑departmental joint enforcement and coordination—have effectively compelled lagging production capacities to exit the market more rapidly. In addition, by adopting principles such as “more reductions, more subsidies” and “early reductions, greater subsidies,” regions and enterprises with the necessary conditions have been encouraged to promptly retire ineffective and inefficient capacity, further advancing industrial restructuring and upgrading. Some regions and firms have proactively adjusted their capacity‑reduction schedules, bringing forward portions of their planned phase‑out targets from later years to this year.

　　Meanwhile, Xu Kunlin stated that the recent rebound in coal prices and the resulting improvement in corporate profitability are both the intended outcomes and an inevitable consequence of supply-side structural reform. However, if coal prices rise irrationally, deviating from market fundamentals, this could undermine the overall progress of capacity‑reduction efforts and jeopardize the stable supply of energy. To address this, the National Development and Reform Commission has released some additional production capacity by expanding safe, efficient, and advanced output and steadily advancing capacity‑replacement measures, while guiding relevant coal enterprises to organize production in line with market demand.