FEATURE: China’s iron ore amid greener steel – steel
All the changes in the world’s largest iron ore consumption country are attributed to Beijing’s resolve in dealing with industries burdened with excessive capacity, with steel being a primary target both for its oversupply of finished products and the heavy pollution generated producing them. When the government of Chinese premier Xi Jinping came to office in 2013, a major part of the economic development remodeling he espoused was for the country to achieve slower but sustainable growth from the high GDP increases in the past few decades, with a parallel crackdown on pollution which Beijing considers definitely out of tune with sustainability.
At last month’s Dalian conference, speakers from both inside China and outside including CISA, the Metallurgical Mines’ Association of China, and leading steel mills such as HBIS, Baoshan Iron & Steel, and even ArcelorMittal, all acknowledged the remarkable changes that have occurred in China’s steel industry, especially the substantial capacity removal since 2016 and the battle against pollution over the past two years.
China axed 150 million t/y of steelmaking capacity over 2016-2018, and eliminated all induction furnace capacity nationwide – estimated at 120-140 million t/y – as the role of the latter had always been murky, with most IF mills being located in remote areas of the country and beyond scrutiny.
Then in the winter of 2017, the central government took the initiative of mandating restrictions to the operations of those enterprises and industries seen as being core contributors to the atmospheric pollution which envelops many urban centers in winter, especially in northern China.
In a move unprecedented in scope, the operations of coke ovens, sintering plants, shaft furnaces and blast furnaces in the “2+26” cities circling the Beijing-Tianjin-Hebei area were placed under blanket control during the period spanning November 15, 2017 through March 15, 2018. Authorities at all levels of government – central, provincial and local – worked to ensure that the operational capacities of these facilities were cut by 30-50% over the six months.
“It is worth all the efforts, though initially we had thought it would be just all talk and no action,” admitted a Beijing-based iron ore trader to Mysteel in a January day, pointing at the bright and blue sky then.
For the coming winter, the restrictions being placed on steel sector operations have been finetuned to directly target at PM2.5 particulate matter emissions and are aimed at reducing the number of days officially regarded as “heavy-polluted” during the period of October 1-March 31, 2019. The tweaking of the campaign has given all the local authorities in the 2+26 cities more room to work out their individual measures, rather than having to introduce (and then verify) blanket controls, with the bottom line being fulfilling the high-priority tasks.
Interestingly, few in China interpret this as a potential loosening of control and see it as “the end justifying the means”. They note Beijing’s upgrading of the former Ministry of Environment Protection into the Ministry of Ecology and Environment in early 2018 and recognise it as a clear signal that China is not only seeking a short-term improvement but long-term ecological protection amid economic development.
Moreover, in parallel with the continuing winter restrictions on polluting enterprises including steel, Beijing has also launched a three-year “Blue Sky Safeguard” plan running until 2020 which spells out specific targets on air quality improvement in the next couple of years.
Written by Hongmei Li, li.hongmei@mysteel.com
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