Shagang Revises Steelmaking Facility Upgrading Plan

Shagang Group, China's largest private steel producer in East China's Jiangsu province, has revised its steelmaking facility upgrading plan by adding a 90-tonne electrical arc furnace (EAF) to be scrapped in exchange for a 130-t EAF in the latest notice for public review over December 12-18, an official from the Industry and Information Technology Department of Jiangsu (Jiangsu IITD) confirmed on Thursday.

Shagang's EAF and converter capacity swap plan has quietly been updated in the December 12 release from Jiangsu IITD, compared with the November 27 version, Mysteel Global noted, as in the original copy, it only mentioned the replacement of three existing 50-t converters with a 120-tonne converter and a 50-t alloy steel EAF.

The old-for-new steelmaking capacity swap is 2.98 million tonnes/year in exchange for 2.35 million t/y, according to the latest release, also adhering to the old-for-new capacity ratio requirement at 1.25:1, just as the November 27 copy.

The schedule has remained the same, as the construction works will start in September and December 2020, and the commissioning of the new facilities and the dismantlement of the old furnaces will all be in June 2022, Mysteel Global understands by comparing the two notices.

Shagang officials declined to comment on the revision of the upgrading plan, but an official from the Jiangsu IITD confirmed that it is prompted by Beijing's latest guidelines on steel industrial restructuring.

On November 6, Beijing shared its latest guidelines on the restructuring and optimization of 48 domestic polluting industries including steel, listing out all the key producing facilities in three categories of "promotion", "restriction" and "abolition", as Mysteel Global reported, in which converters and EAFs of between 30-100 tonnes are under the "restriction" category, which means that such facilities are not encouraged to exist though no deadline of dismantlement has been given.

"These are clear-cut messages from Beijing to the steel market that it would like to see gradual upgrading of iron and steelmaking facilities, and those under the 'abolition' category should be eliminated by no later than 2020, while those falling into 'restriction' may be given a longer grace period," a Beijing-based steel analyst commented on Beijing's guidelines.

Shagang has been into the spree of series of facilities upgrading, as earlier on November 20, Shagang announced the plan to build two 2,350 cu m blast furnaces with 4 million t/y steel capacity to replace eight blast furnaces between 480-580 cu m.

In Beijing's latest guidance, blast furnaces at 400-1,200 cu m and those above 1,200 cu m but fail to meet emission and energy consumption requirements are under Beijing's "restriction" category too, Mysteel Global noted.

At present, Shagang boasts 45 million t/y steel capacity with the 25 million t/y at its core Zhangjiagang steelworks in Jiangsu and the remaining at three other steelworks in Huai'an city of Jiangsu, Anyang of Central China's Henan and Dalian in Northeast China's Liaoning provinces.

This article has been published under article exchange agreement between Mysteel Global and SteelMint.