STEEL mills in China are becoming cleaner every month as the government pushes to curb its smoke-stack industries. But they’re not getting any leaner.

    Despite efforts to step up environmental checks and trim out excess capacity, steel output by the world’s top producer has risen year on year for the past seven months.

    As emissions cuts will mean steel mills are better able to meet stricter government standards, the government may find it more difficult to cut overcapacity in a sprawling industry.

    For now, domestic demand from infrastructure and construction has been robust, absorbing most of the extra supply. But a steeper slowdown in the world’s second-largest economy could force mills to ramp up sales abroad.

    Production dipped by far less than expected as mills sustained output even as they cleaned themselves up, data showed.

    They could do this largely because steel prices SRBcv1 have risen 40 percent this year, and strong domestic demand is expected to continue, underpinning those increases, though exports have fallen to their lowest since February.

    By end-September, China had completed more than 80 percent of this year’s capacity reduction goals in coal and steel, said Huang Libin, an official at the Ministry of Industry and Information Technology.

    China has targeted a cut of 45 million ton from its surplus steel capacity this year.

    “If steel mills are profitable, there’s no reason for the government to order them to reduce production if they meet environmental criteria,” said Xia Junyan, investment manager at Hangzhou CIEC Trading in Shanghai.(SD-Agencies)