As China aims to meet goals to curb emissions, the country will cut crude steel output in 2021 and launched a nationwide investigation into the implementation of steel capacity cuts since 2016.
Known as the world’s top steel producer, China started a campaign to eliminate outdated and excess capacity in the ferrous sector in 2016.
Last year, the imports of steel products rose 64% and billets surged by nearly 500%, but the country’s steel output also hit record levels as industrial activity roared back to life following pandemic shutdowns.
China’s National Development and Reform Commission (NDRC) and the Ministry of Industry Information Technology (MIIT) said in a statement they will jointly investigate excess steel capacity and the construction and production of steel smelting projects.
In a statement, the authorities said “Since 2016… the reduction of steel capacity has achieved significant results, but some deep-rooted contradictions have not been solved fundamentally”.
They also said they would promote high-quality development over quantity after some companies had “an impulse” to construct steel projects blindly, as industrial output recovers from the impact of the pandemic, which is undermining capacity cuts.
In the last five years, China has cut 150 million tonnes of capacity and 140 million tonnes of low-grade steel. However, in 2020, its annual crude steel output has set a record for four straight years and hit 1.065 billion tonnes.
The inspections will include self-rectification by each local government, on-site checks, and a summary report, Thursday’s statement said.
The authorities will focus on cutting crude steel output at outdated mills with poor environmental performance and ensure 2021 crude steel outputs fall from the previous year as China strives for long-term carbon neutrality.
China’s top steelmaking city Tangshan has already urged long-processing steel producers to cut output by 30%-50% this year, sending futures prices of rebar and hot-rolled coil to over 5,000 yuan per tonne records.
Source: Metaljunction
