A mill in central China that can produce half as much steel annually as the UK, has fired up its furnaces on the back of stronger prices, highlighting difficulties faced by Beijing to cut sector capacity.

Highsee Steel, also known as Haixin, was the poster child for China’s debt-laden steel sector when it went dark in spring 2014. Now it is at the forefront of a new trend of mills halting or reversing planned capacity cuts after a 20 per cent jump in steel futures bolstered margins.

The global steel industry fears the influx of speculative buying that pushed Chinese steel futures to levels seen before the 2015 slide is encouraging steelmakers to overproduce once again. Spot prices for rebar in China rose nearly Rmb400 a tonne throughout April to Rmb2,871.