CONF: China to update steel capacity swap guidelines
The existing guidelines, released in 2015 but updated and strictly executed since the start of 2018, has been “very necessary” in exiting outdated capacities, optimizing the industrial structure, and enhancing the concentration in the steel sector, Lv said at the 11th (2020) China Iron & Steel Development Forum.
By 2019, China had installed 246 million tonnes/year of iron and 271 million t/y of steel capacity in exchange of 281 million t/y and 305 million t/y of old capacities respectively, or at ratios of 1.14:1 and 1.1:1, he disclosed, confirming that the guidelines, thus, will still be “implemented firmly”, though updates will be necessary to fill up the loopholes shown when executed in the past couple of years.
MIIT launched a thorough review of the new steel projects in the name of “old-for-new capacity swap” since late 2019, which has uncovered issues relating to the reincarnation of the zombie capacities and capacity expansion in reality in the name of swap, Mysteel Global understands.
The misconduct was realized via the practices that some Chinese steel mills had not dismantled the old capacities upon the commissioning of the new projects, some old capacities had been counted multiple times in exchange for new capacities, and some producers had used the foundry or ferroalloy capacities for new iron or steel capacities, Lv highlighted.
Beijing, therefore, announced in January to suspend approving any new projects via the swap guidance until the new version with more details is released, as reported. And some major updates in the new guidelines are in the stage of feedback collection among the industrial players, he disclosed.
Possible updates in the capacity swap guidance:
Issues |
Existing |
Proposed |
Old-for-new capacity swap ratio |
Environmentally sensitive areas - 1.25:1 |
Higher than 1.25:1 |
Other areas - 1:1 |
More details, ratio higher than 1:1 |
|
Environmentally sensitive areas |
“2+26” cities in Beijing-Tianjin-Hebei area, the Yangtze River Delta, Pearl River Delta |
Fenwei Plains added to the list |
Definition and monitoring of old capacities |
/ |
Detailed archiving of old capacities and closer monitoring of the scrapping |
Old capacities used to exchange for new projects |
/ |
Not to be used in exchange for various new projects, or to limit the number of new projects involved |
Foundry or ferroalloy capacities unqualified in exchange of new projects |
Source: Lv’s presentation on July 24
The proposed update, however, will not affect the around 20 million t/y steel capacities that had been approved by the related authorities and had completed the public feedback collection by January, Lv clarified.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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