Posted on 19 Apr 2021
Eastern China's Shandong province plans to eliminate 21.41mn t/yr of installed crude steel capacity and 22.38mn t/yr of pig iron capacity by 2022, according to a document issued by the local government.
The closures are in line with the province's plans to consolidate its steel industry and relocate capacity closer to the coast, away from urban areas and out of China's "2+26" localities subject to stricter air pollution controls. This round of removals is targeting capacity along the Qingdao-Jinan rail corridor. Any mills that cannot comply with the plans, which are in line with national policy goals, will need to get approval from the provincial government, it said.
Eleven mills will have their capacity removed. In 2021, steel capacity of 4.65mn t and 5.07mn t of pig iron capacity will be retired. In 2022, 16.76mn t of steel and 1.731mn t of pig iron capacity will be removed.
Scheduled for removal are blast furnaces of up to 1,350m³ in size, converters (basic oxygen furnaces) of up to 120t and electric arc furnaces of up to 80t.
Most of the cuts are within the Beijing-Tianjin-Hebei air pollution control region that includes the Shandong cities of Ji'ning, Ji'nan, Zibo, Dezhou, Liaocheng, Binzhou, and Heze. The remaining 2.63mn t/yr of pig iron and 2.55mn t/yr of steel capacity cuts fall outside the pollution region.
The capacity cuts do not directly translate into lower output. Mills can add capacity under a capacity swap programme that is set to tighten the swapped ratio between old and new capacity.
Beijing has stepped up calls for the steel industry to reduce output to reach its carbon neutrality goal by 2060. Crude steel output rose to its second-highest level in March.
Source:Argus
