According to Bloomberg, China is suspending a rule that required the elimination of existing capacity as a condition for building new plants and would look to replace it with something else. The old policy offered significant exceptions, Bloomberg said, particularly for electric arc furnace mills. 

“The capacity swap program has actually led to growth, as mills often opted to demolish outdated plants for bigger ones,” He Jianhui, an analyst at SDIC Essence Futures Co., told Bloomberg. “Now that the whole industry demand is clearly declining, overcapacity is becoming more and more serious, and this document from the ministry is sending a signal of control.”