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According to Fitch Ratings, China has eliminated more than 150 million tonnes of substandard steel production capacity that has been undocumented, small and flexible, and highly polluting since the 2015 supply reform.
This follows significant progress in undocumented substandard steel and overcapacity over the past five years, resulting in an industry utilization rate of 80% in 2019 and 79% in 2020, up from 70% in 2015 and in line with the target. the 80% target set in China's 13th Five-Year Plan, despite documented higher steel production at the end of 2020.
China's steel industry is highly fragmented. There are a large number of small producers with plants with a capacity of 1-3 million tonnes that are not attractive to large state-owned enterprises as targets for acquisition, which makes consolidation more difficult than in other industries such as coal and cement.
So far, industry consolidation has been dominated by leading manufacturers, with concentration in the top 10 having increased by 3% since 2015 and reached 37% in 2019.However, this figure does not meet the 13th Five-Year Plan target of 60% ... Production was also influenced by regional policies limiting production to control carbon emissions. The contribution to steel production in the northern region of China increased to 35% in 2019 from 33% in 2015 due to a decrease in production in eastern China.
