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China reaffirms commitment to lowering steel, coal capacity to stem glut

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China reaffirms commitment to lowering steel, coal capacity to stem glut

China hasreaffirmed its commitment to lowering its steel and coal capacity, the South China Morning Post reported July14, citing a statement from the country's National Development and ReformCommission.

The countryplans to lower its steel and coal output capacity by 45 million tonnes and 280million tonnes, respectively, in 2016, announced commission head Xu Shaoshi onJune 26. China has reduced steel capacity by 90 million tonnes in the fiveyears to the end of 2015.

In aneffort to ensure that China's goals are met, the local governments will be heldaccountable should they fail to meet the capacity reduction levels theypledged to attain,the report said, citing Zhao Chenxin, a spokesman for the commission.

The country'sefforts to overcome the capacity glut seem to be working, as operations of coaland steel mills have improved and expectations on the market appear bullish,the report said, citing Zhao who noted that the very same uptake in marketconditions have held back some manufacturers from cutting back. "Allrelevant parties should keep a clear head to firmly press ahead with the planto reduce excess capacity," Zhao said.

Meanwhile,two of China's top state-owned mills, BaosteelGroup Corp. and Wuhan Iron and Steel (Group), plan to merge as theindustry consolidates, the report said.