China is to cut the annual production capacity by 100 million tons of iron and 55 million tons of steel in the coming five years, in a bid to cool down the overheated steel industry, an official said Tuesday in Guiyang.

China is now the world's biggest steel producer and consumer. Its annual steel output is equivalent to those of the United States, Russia and Japan put together.

Last year, the country produced 348 million tons of steel out of its annual capacity of 470 million tons, said the official of the State Development and Reform Commission.

According to a recent survey of the commission, China has 1,499 steel companies. Only 15 of them have an annual production capacity of more than 5 million tons each and 40 others, 1 million to 5 million tons.

However, more steel companies are under construction or on the drawing table of planners.

All this indicates steel supply will be much more than the expected demand though large amounts of steel products will be needed to support the country rapid development, said the official.

The majority of the steel projects under construction was started up by local governments without the approval of the central authorities, added the officials.

The survey also shows that low-grade steel products are overstocked while high-end products such as plates for car and consumer electronics production are in short supply.

Source: Xinhua