Posted on 13 Apr 2021
In response to Beijing’s plan to cap crude steel production this year at last year’s level, the China Iron and Steel Association (CISA) is recommending that production cuts should not be imposed on all steelmakers indiscriminately, but instead should be targeted at steelmakers operating less eco-friendly facilities or those deemed to be ‘illegal’, according to an April 11 release from the association.
“In recent years, China’s steel production has been driven by demand (and) constantly increasing,” CISA said in the post. However it warned that it is hard to imagine that “the (robust) steel consumption last year and seen currently will last for long. The central government’s target announced at the start of the year to curb crude steel production has indicated the country’s policy for the steel sector.”
CISA says that production at all steelmakers should not be curtailed and suggests that exemptions should be made for steel mills that meet ultra-low emission standards and for electric arc furnace-based steelmakers. But this does not mean they can produce steel freely as they also have to avoid any on-year rises in steel production, it cautioned.
Those mills operating illegal steel capacity and those steel projects that contravene laws must be banned, according to CISA, while those steelmakers whose operations fail to meet the ultra-low emission standards – mills that are struggling to control emissions – should reduce production too. The declines in steel output should be realized by means of curtailing molten iron production, it added.
In a situation where steel demand is steadily rising but production is declining, to ensure that steel supply remains stable fewer exports and more imports are foreseeable, especially imports of primary materials such as billet, CISA maintained. The focus of China’s steel market should be on satisfying domestic demand, and imports could fill the supply gap if necessary.
The requested declines in steel production are also in response to Beijing’s aim to realize ‘peak carbon’ by 2030, and there are also other ways for the steel sector to help meet the carbon emission target, CISA noted. The first is to cut steel production as the room for declines in carbon emissions during the steelmaking process is limited.
Another way to reduce carbon emissions is to improve metallurgical technology, a task that will require the joint efforts of the government, steelmakers and the whole industry, CISA said. A realistic way to cut carbon discharge is promoting the use of electric furnaces. Carbon dioxide emissions generated to produce one tonne of steel using EAF technology are some 1.6 tonnes lower than those created via the blast furnace route, the association points out.
CISA also said that high-strength steel products of good quality should be further generalized within the industrial chain as another ‘green development’ initiative.
The association’s Sunday statement followed the release of a joint post from China’s Ministry of Industry and Information Technology and National Development and Reform Commission on April 1, which announced both were intending to re-examine the results of steel capacity reduction schemes since 2016.
The major tasks on the two organizations’ agenda include rechecking the elimination of facilities that were used to produce substandard steel, confirming the situation of steel projects under construction and coming on stream, and to rein-in steel production for 2021, Mysteel Global notes from the joint release.
The re-examination will have three components. Local authorities in provinces and cities should first organize inspection teams and check the local steel mills under their jurisdictions. Following this, central government-appointed inspectors will check on-site, and finally the inspection report will be delivered to the relevant departments.
China’s crude steel production has risen for each of the past five years, last year gaining another 7% on year to top 1.065 billion tonnes, data from China’s National Bureau of Statistics showed.
Source:Mysteel Global
