China Raises Steel Capacity Replacement Ratios to 1.5:1, Phases Out Inter-Enterprise Transfers

On May 18, China’s Ministry of Industry and Information Technology issued new capacity replacement guidelines for the steel industry. The new rules raise minimum replacement ratios to 1.5:1 for blast furnaces and steel furnaces nationwide, with merger and acquisition (M&A) replacement ratios set at 1.25:1.

The ministry also established a two-year transition period for inter-enterprise capacity transfers, after which companies will only be permitted to move capacity through substantive M&A activities. The implementation plan is valid for 24 months.