A top government official in China urged steel producers on Thursday to stop projects aimed at expanding capacity as Beijing tries to curb a glut in the industry that is dampening prices.
"I would like to call on all steel producers, including major ones, not to construct any new projects within the next three years," Li Yizhong, minister of industry and information technology, told reporters.
The Chinese steel industry suffers from a huge gap between annual production capacity, which comes in at 660 million tonnes, and demand, which only stands at 470 million tonnes, according to Li.
He said that once ongoing projects are completed, annual capacity will be boosted by another 58 million tonnes.
"If this trend continues, this industry will not have any future," he said, adding that his ministry would not approve any projects that would boost production.
China relies on imports for half of its consumption of iron ore -- used to make steel -- and its massive demand has been one of the main drivers for global prices.
But Chinese steel mills have been hit hard as demand has slowed while iron ore prices continue to rise.
{{/usCountry}}But Chinese steel mills have been hit hard as demand has slowed while iron ore prices continue to rise.
{{/usCountry}}