Nearly 40 million tons of steel capacity to be cut! Multiple regions impose strict controls on steel production capacity
Data released by the National Bureau of Statistics shows that China’s total crude steel output hit 1.013 billion tons in 2022, a year-on-year decrease of 2.1%, falling for two consecutive years and completing the national crude steel reduction task. Compared with 2020 output, China has cut crude steel production by nearly 40 million tons in total. In 2022, all of the country’s top five steel-producing provinces saw output declines. Hebei, China’s largest steel-producing province, recorded a crude steel output of 210 million tons, down 5.79% year on year. Meanwhile, three provincial-level regions achieved a double-digit year-on-year drop in crude steel output: Jilin down 11.82%, Xinjiang down 10.55%, and Qinghai down 35.04%.
Although crude steel output posted year-on-year declines for two consecutive years, China remains the world’s top crude steel producer with an annual output above one billion tons, holding a massive lead over all other countries, and no nation is expected to surpass China’s steel production volume for a long time to come.
The CPC Shandong Provincial Committee and Shandong Provincial People’s Government issued the Three-Year Action Plan for Building a Pilot Zone for Green, Low-Carbon and High-Quality Development in Shandong (2023-2025). It proposes to optimize the layout of steel, coking and aluminum industries via capacity replacement, quota trading and equity cooperation to advance mergers and acquisitions, strengthen the Rizhao-Linyi coastal advanced steel base, upgrade the Laiwu-Tai’an inland premium steel base, phase out all unplanned inland steel capacity, and drastically raise the proportion of coastal steel capacity.
Shanxi Province released its Carbon Peaking Implementation Plan, which calls for deepening supply-side structural reform in the steel sector, prohibiting new capacity additions, strictly enforcing capacity replacement rules, accelerating replacement and upgrading of restricted process and equipment capacity, and lifting the share of advanced capacity. Meanwhile, the Synergistic Pollution and Carbon Reduction Implementation Plan issued by Shanxi Department of Ecology and Environment also bans new steel and similar capacity; except for capacity replacement projects and high-energy-consumption, high-emission projects within the 2021 classified disposal list undergoing formalities completion, Taiyuan and its surrounding areas will not approve new steel, coking or cement projects.
The Three-Year Action Plan to Eliminate Heavy Air Pollution in Zhejiang Province was published. It targets steel enterprise mergers and reorganizations to boost industrial concentration and cut the number of steel smelters to roughly 10, scales up full-scrap electric furnace steelmaking to shift from long-process to short-process steelmaking with over 1.5 million tons of long-process capacity reduced, and gradually integrates and phases out independent hot rolling enterprises and production lines.
Jiangsu Province issued the Carbon Peaking Implementation Plan for Industrial Sectors and Key Industries, laying out specific carbon peaking roadmaps for high-emission industries including steel. It explicitly forbids new steel capacity and encourages eligible blast furnace-converter long-process mills to locally transform into electric furnace short-process production, targeting a short-process steelmaking share of over 20% by 2025.
Shanghai released its Synergistic Pollution and Carbon Reduction Implementation Plan, vowing low-carbon upgrading of traditional industries, a ban on new steel capacity to ensure crude steel output only drops rather than rises, and vigorous transition from long to short-process steelmaking to lift the scrap steel ratio to 30% by 2030.
Chongqing Municipality rolled out its Carbon Peaking Implementation Plan for Industrial Sectors, stipulating that Chongqing’s crude steel capacity will be capped at 15 million tons during the 14th Five-Year Plan period, with strengthened tracking and supervision over project filing, environmental impact assessment and energy conservation reviews.
Six municipal departments of Hebei Province jointly issued the Synergistic Pollution and Carbon Reduction Implementation Plan, requiring lawful relocation, transformation or shutdown of heavily polluting enterprises in urban built-up areas, prohibiting illegal new steel capacity additions, achieving Class A environmental performance standards for all local steel enterprises by 2025, and raising the share of capacity meeting benchmark energy efficiency levels to 30%.
These policies reflect China’s national strategy of cutting excess steel capacity and optimizing industrial structure. On January 19, Xin Guobin, Vice Minister of Industry and Information Technology, stated that China eliminated more than 150 million tons of backward steel capacity during the 13th Five-Year Plan period and fully eradicated illegal ground bar steel production.
Cutting crude steel capacity is a policy measure adopted by the Chinese government to adjust supply and demand, guiding steelmakers to abandon extensive volume-driven growth and push the sector toward high-quality development. China fulfilled its crude steel capacity reduction quotas as scheduled in both 2021 and 2022, and with continuous tightening of provincial policies, national crude steel output is likely to decline further in 2023.
Source: Internet
