China’s steel sector is living at the mercy of banks these days, as sluggish economic conditions and chronic overcapacity brought steel prices to their lowest point in 20 years in the first quarter of this year.<br /> <br /> Meanwhile, a nationwide anti-pollution campaign has raised costs and helped put hundreds of mills on the brink of bankruptcy. Steelmakers are required to upgrade their equipment to meet the tough new emission standards following the passing of new legislation for environment in April this year.<br /> <br /> Zhao Xizi, chairman of the All-China Chamber of Commerce for Small and Medium-Sized Metallurgical Enterprises, said in a recent industry conference that in some parts of the country, around 70% of firms could not afford the upgrades required, and with loans to the steel sector cut by around 10% since the beginning of the year, banks are reluctant to help.<br /> <br /> From the second half of this year, around 200 private steel firms with capacities of less than 1 million tonnes a year would face higher power and water prices aimed to drive smaller players out of the market, putting 60 million tonnes of capacity at risk of closure, Zhao said.<br /> <br /> An additional 70 million tonnes of low-quality steel production is also expected to be shut and replaced, he said.<br /> <br /> In the same conference, Su Bo, Vice Minister of Ministry of Industry and Information Technology reiterated the government’s goal to reduce 80 million tonnes of capacity for steelmaking by 2017.<br /> <br /> Hebei, the largest producer of steel in China, is planning to close 60 million tonnes of capacity by 2017 in order to meet its anti-pollution commitments. It will cut 15 million tonnes from the current 300 million tonnes capacity this year.<br /> <br /> <p> However, while China plans to cut its steel capacity by a total of 27 million tonnes this year, it still saw a net capacity increase of 4.68 million tonnes over the first quarter, Zhao stated. </p> <p style="text-align:center;"> <img src="/upfiles/news/image/20140528/20140528165438_5131.jpg" alt="" /> </p>