In an emergency notice informed by the MIIT, the steel industry is required to put the work of controlling gross output as the top priority. Local commercial banks should reduce or suspend their loans to low efficient steelmakers and unreasonable expansion projects. The CISA and the CCCMC should work out ways to further reduce the number of iron ore importers. Local authorities are expected to eliminate outdated capacity and facilities ahead of the timetable they agreed with the NDRC.

According to the MIIT, China’s apparent crude steel consumption is estimated at 462 million tons in 2009, up about 10 million tons from last year, while net steel exports would drop by 40 million tons. Therefore, there will be a surplus of 25 to 30 percent in capacity, especially in flat products, against the real demand. Furthermore, the excessive imports of iron ore have added difficulty to mills’ cash flow and made them more exposure to the operational risks.