China Issues New Policy Draft concerning Supply Side Reforms for its Domestic Steel Sector
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With the introduction of supply-side structural reforms in the steel sector in year 2017, China made substantial progress last year, with capacity-cut goals in saturated steel smelting and coal mining sectors beaten, and deleveraging pushed forward steadily. Now as per SteelMint sources, on 29 Aug'19, MIIT (Ministry of Industry and Information Technology), China has issued a draft copy of 'Guide to Promote EAF Steelmaking' that aims to further deepen supply side structural reforms and promote steel industry transformation as well as green development. The steel sector participants are required to be submit their views/agreements/disagreements before 16 Sep'19 in writing beyond which it will be deemed to be accepted. Below is a summary of the new 'Guide':
The Guiding Concept
To take the supply side structural reform as base line and practice the concept of green development and adhere to principle of market as key player, while governments make out roadmap for steel sector upgradation. Capacity swap and registration procedures of steel projects must be strictly followed and by no means new capacity shall be added.
Key Goals
Make sure that the ratio of steel output by EAF accounts for 20% or so by the end of '14th five year plan' (by 2025) with the increased competitiveness in EAF steelmaking. Greener steelmaking shall be achieved in short route steelmaking by meeting ultra-low emission standard and per unit energy consumption shall be lowered by another 10%.
Establish orderly and diverse steel scrap supply system, so that scrap utilization ratio in steelmaking exceed 30% and scrap supply capacity amount to 300 MnT. A number of benchmark setting enterprises shall be cultivated and supported in terms of short route steelmaking and scrap processing and distribution centres.
Key Tasks
1) Optimize short route steelmaking capacity layout
With the strict conditions of capacity swap and prohibition of new capacity additions, areas that are capable of taking capacity transfer and have market demand and scrap supply should be encouraged to develop EAF steelmaking. By the end of '14th five year plan' the accepted capacity transfer by various provinces (cities) should have at least 30% of EAF capacity in the total.
Small and medium sized EAF plants will be encouraged to operate in areas where there conditions of scrap reserve, market demand, transport and operational profitability are viable, so that they can make use of local waste and meet specific demand locally while contributing to cleaner city.
2) Push conversion from long route to short route
To push a batch of BF-BOF mills to convert to EAF plants, particularly in areas where environment is fragile and industry is concentrated such as Beijing-Tianjin-Hebei and its surrounding area, Yangtze river delta areas; For those mills that are in line with municipal planning with conditions suitable for conversion yet restrained by environmental protection, a conversion to short route is welcome in a bid to reduce emission of pollutants and achieve " harmonious development between steel and city". Regulate the use of steel scrap by long route mills to prevent incidents in safety, quality and environment because of improper operation.
3) Promote short route steelmaking to greener path
It is required that newly built EAF plants including relocated and converted ones must meet ultra-low emission requirements in all aspects and existing EAF plants must actively push for transformation to ensure all achieve ultra-low emission by end of 2025. Dioxin prevention and secondary, tertiary bagging dust removal should be promoted in EAF mills. Noise treatment, classification and cleaning of scraps before furnace feeding should be done and instant flue cooling system and efficient bagging dust removal must be equipped with EAFs.
While promoting the waste recycling function of EAF,efforts must be made in developing new type EAF equipment with core technology, automatic closed material feeding, scrap preheating, residual recovery, flat furnace hearth smelting and interface featured technology and equipment for dyanamic,orderly,coordinated and continuous operation so that unit energy consumption can be further reduced while uplifting intelligent production level.
4) Set-up system for steel scrap supply
Guide the optimization of steel scrap layout and push the set up a number of scrap processing and distribution enterprises, encourage them to expand its dimensions and integrated through merger and acquisitions. Encourage steel mills to set up scrap collection, processing and distribution companies to contribute the chain of scrap collection,dismantling,processing,classification and distribution by utilize more out-out-life autos, used appliances. Step up efforts to crackdown smuggling scraps in export. Promote platform for scrap spot and futures, where price index is well established and scrap pricing is transparent and fair.
5) To form EAF steelmaking standard
To set up standards for EAF mills that will include standards for EAF equipments,raw material ,steel products, process and discharge so that EAF mills can take reference when it comes to construction, renovation and operation. Standards will also cover scrap classification, quality control, testing and scrap processing equipment so that EAF steelmaking can be operated orderly under industrial standard.
6) Speed up cultivation of cutting-edge enterprises
By the end of 2025, 3 to 5 outstanding companies will be selected in the field of EAF steelmaking and scrap processing to enhance interaction amongst participants and set model for wider promotion. Ramp up efforts on quality and brand by conducting EAF steel classification and certification so as to improve stability of quality, reliability and applicability.
Policy measures
Strengthen policy back-up
To promote the transfer of total pollutants discharge quota along with the shift of steel capacity. For those areas with fragile capacity in environment, no transfer of pollutant quota are allowed. For those EAF mills that meet ultra-low emission standard, requirement on emission reduction can be softened when the overall emission level city-wide under control in heavy polluting days.
Strengthen industry support
Channelize social capital to invest and provide support to EAF route and support synergized cooperation amongst enterprises,universities,instititues etc to speed up conversion and application of new technology and equipment, providing back-up for premier steel needed in key equipment. Provide support to develop matching facilities in upstream system such as graphite electrode to further reduce smelting costs.
Provide financial support
Encourage the financial institutes to provide comprehensive financial service to long route mills which are converting to EAF mills.
Lower the power costs
To deepen the power system reform and call off surcharge of power costs so as to lower EAF mills costs. Encourage local governments to pilot run cross-region direct power procurement; promote integrated development of coal, power and steel in coal rich areas; set up model companies that take the leverage rich water resource in SW China so that hydraulic power can be directly supplied to EAF mills.
Highlight the resources restraints
Further highlight the restraints of environment protection, land, water resources, logistics and energy consumption etc. Those steel mills that can't reach relevant standard, particularly those that fail to meet ultra-low emission requirements will undergo their costs bumped up. Based on actual situation in Beijing-Tianjin-Hebei region, due efforts should be made on stepped water price as per water consumption.
Enhance the coordination and communication among different departments
There should be proper coordination with regards to policy making, planning, regulation enactment, standard formulation and taxation etc, so that synergy will be formed. Local governments should motivate market participants to actively play their roles in EAF steelmaking to ensure its orderly, healthy and sustainable development. EAF mills that are not in line with regulations and industry policy such as environment policy, energy consumption, quality, safety and technology etc should be excluded from new projects. New capacity shall be prohibited.
Increased publicity
Awareness of green steelmaking should be risen by promotions through multiple channels and media. Publicity of the successful model should be made and clear explanation of the policy should be promoted to answer concerns.
