China’s steel industry needs to use capacity management as the main means to solve the imbalance between supply and demand, said He Wenbo, executive chairman of the China Iron & Steel Industry Association (CISA) at the 19th China Steel Industry Chain Market Summit. At the same time, steel mills need to transition to low-carbon production to ensure long-term vitality.
Kallanish learned from his speech that the current contradiction in China’s steel industry has changed to how to use sufficient steel production capacity to meet limited steel demand. This means that China’s steel production capacity needs to be reduced in the transition to meet low-carbon emission targets, and steel mills can promote mergers and reorganizations to increase production capacity concentration.
He pointed out that the conditions are not favourable to maintain a high proportion of exports, but the government will encourage the export of high value-added products. He said that product exports are driven by the market, supply chain or industrial investment, and high value-added steel exports are supply chain-driven exports. Intense competition in the international market and trade barriers have hindered the export of ordinary steel products from China, he adds.
As of 2023, around 380 million tonnes of steel capacity has been constructed within 100 kilometres from the coastline in China. This will be finally boosted to 400m t/y in recent years, which almost meets the government’s requirement for coastal steel industry layout. This also means that the inland steel industry will be reassessed.
The essence of the transformation of the steel industry is green transformation, he said. The five tasks being promoted by China’s steel industry include ultra-low emissions, improving energy efficiency, formulating a carbon neutral route, improving the steel industry EPD, and accelerating research on low-carbon emission steel standards.
CISA is planning to launch a new “Cornerstone Plan”, with the main purpose of studying and deploying future resources (mainly iron ore resources) for the low-carbon transformation of steel processes in terms of type and grade. This is still about sourcing steel raw materials, but the focus has shifted from total quantity to variety to be closer to the raw material requirements for green steel.
According to CISA’s information, the current “Cornerstone Plan” has pushed the development of around 50 million tonnes/year of additional iron ore concentrate production in China. It is also looking to boost scrap supply by revising policies.