The National Development and Reform Commission (NDRC) urged local governments to release list of outdated steel firms to be demolished in the new round of restructuring of the steel industry.

Under the NDRC's restructuring plan, China will scale back iron production by about 100 million tons in the next five years to eliminate redundant production. The steel production will be reduced by 55 million tons before 2007.

North China and East China account for 81 percent of the nation's outdated iron production and 59.8 percent of the outdated steel production, show NDRC figures.

Provinces of Hebei, Shanxi, Jiangsu, Shandong and Henan have become key areas in the restructuring.

Hebei released the first backlist of outdated steel companies to be demolished before the end of 2007 last week. The first group of 26 firms in Hebei will cut iron production by 3.98 million tons and steel production by 3.73 million tons.

Hebei's crude steel output is expected to reach 90 million tons this year, 21 percent of the national total. The NDRC has criticized Hebei's irrational approval of investment in a raft of low-quality projects, describing them as a "blight" on the province.

The province is urged to release the backlist for the second and third batches of steel firms to be demolished.

China's steel industry faces danger of over-productivity. The national steel production capacity reached 470 million tons at the end of 2005 and another 150 million tons are still in construction. But the steel consumption in the year only stood at 350 million tons, far less than the supply.

Source: Xinhua