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Shutdown of substandard steel mills likely to reduce steel output by 4%-7%
Jan 11, 2017  15:22:09
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Chinese Central Government sets a deadline of June 30 to root out the production of substandard steel, the CISA (China Iron and Steel Association) disclosed on its Board Meeting on January 10.

Since December last year, inspection teams have probed deeply into unregulated steel smelters in 8 provinces, namely, Hebei, Jiangsu, Shandong, Sichuan, Anhui, Liaoning, Hubei, and Gansu. The capacity of related medium frequency induction furnaces totaled 93.22 million tonnes, according to the statistics of Changjiang Securities. However, the previous moves to clamp down on substandard steel had little influence on the actual steel output. This is partly due to the limited share of induction furnaces’ output in total steel production, and it is also partly the result of the fact that some of such furnaces have not really been weeded out, an insider told the reporter.

On a national scale, currently, the total capacity of medium frequency furnaces is between 90 million and 120 million tonnes, about 10% of national crude capacity, and these unqualified furnaces could churn out 30-50 million tonnes of steel output per year, accounting for 4% to 7 % of the national steel production.

After China successfully overperformed the overcapacity shedding task in 2016, Beijing strengthens its resolve this year to press ahead with the supply-side structural reform. More measures for overcapacity reduction like price differential for electricity are anticipated to be carried out soon, creating a favourable condition for the development of steel market in the long term.

-Edited by Mysteel.net
-To contact the editor on this report at zhangwd@mysteel.com

 
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