Chinese Metallurgy

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China has suddenly suspended its approval system for new steel mills as the government reacts to a deep slump in demand that has eroded industry profits and triggered a surge in exports.

Beijing has been demanding the elimination of existing facilities for years as a condition for the construction of new plants. These rules will no longer apply from Friday, and the government will develop an alternative program, the Ministry of Industry and Information Technology said in a statement.

There have been increasing calls for action from Chinese authorities in recent months as steel prices have fallen amid an increasing oversupply. Demand has fallen by more than 10% since 2020, and many analysts say the industry will have to shrink to match an economy that is becoming less dependent on construction with more steel.