China has made strides in cutting overcapacity

China has made progress in reducing steel production capacity, which has led to increased efficiency and mismatch between supply and demand. In the first seven months of 2018, China cut 2.47 billion tons of crude steel capacity and achieved an annual target of over 80%. China's goal is to cut 30 million tons of crude steel capacity this year. The capacity reduction work has improved the profitability of the steel and power generation industries. In the first half of this year, the profit margins of the steel and power generation industries surged 93.4% and 28.1% respectively. The Chinese government will continue to cut outdated and unqualified production capacity, but move to balance efforts between reducing overcapacity, ensuring supply and stabilizing prices.