context: MIIT (Ministry of Industry and IT) plans for crude steel production to fall in 2021. However, crude steel output grew by some 15 percent in Q1 despite policies such as the environmental crackdown on the steel sector in Tangshan, adjusting export and import rebates, and changing steel capacity replacement measures. With some way to go before reaching their goal, further tightening is likely on the way.
Pressure on the steel industry to conform to national goals is increasing, as signalled by
- the announcement that NDRC (National Development and Reform Commission) and SAMR (State Administration for Market Regulation) jointly visited Hebei to analyse the market situation
- NDRC issued a policy on implementing follow-up inspections of the cutting of steel overcapacity in 2021, specifying
- inspections should include all provinces except those without steel smelting capacity (Beijing, Hainan, Tibet)
- inspection focus
- the progress of production capacity withdrawal
- ascertaining whether new construction meets requirments
- revisiting problems discovered in previous investigations
- monitoring progress in reducing crude steel output in 2021
In addition, more policy is on the way as Economic Information Daily reports that calling for comments for a set of 'Opinions' on steel industry high-quality development are completed and will soon be implemented. Their source says the policy will
- gradually set up production restrictions based on
- carbon emissions
- pollutant emissions
- total energy consumption
- capacity utilisation
- use comprehensive standards to remove outdated production capacity
- improve layout of the steel industry
- no new coastal steel base projects will be allowed
- new steel smelting projects will be encouraged to develop at existing production bases
- by 2025, the proportion of the country's electric furnace steel output in the total crude steel output will increase to between 15-20 percent
- develop domestic and alternative iron ore and scrap sources
- set up an iron ore reserve system
- strengthen the construction of a domestic scrap steel resource supply chain
- encourage firms to build a stable scrap steel supply network and make full use of overseas recycled steel
- by 2025 the domestic iron metal self-sufficiency rate will reach at least 45 percent or more and the domestic annual production of scrap steel resources will reach 300 million tonnes
- set up one or two overseas iron ore mines
- overseas iron ore from Chinese-owned mines should account for more than 20 percent of imported ore
- concentrate industry players
- by 2025 develop several super-large steel enterprise groups
- the top five domestic firms should account for 40 per cent of the industry
- the top 10 should account for 60 percent
- by 2025 develop several super-large steel enterprise groups