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Articles Steel Industry Insight

Environment protection forces steel industry to cut capacity

Northern China have been suffering from smog weather this year, arousing government’s attention to environment protection issue. Thus, governments have issued notice to curbing environment pollution by emissions of vehicles and heavy-polluted enterprises.  

Chinese steel industry has long faced the problems of overcapacity and backward technology, due to insufficient environmental protection equipments. In Hebei province, the largest steelmaking province of China, steelmaking enterprises took up more than 75 percent of heavy-pollution enterprises, forcing local government to take measures to curb air pollution.

In Tangshan, Hebei province, a notice to protect environment by increasing coal and coke quality has been issued, forbidding sales of coal, coal products and coke with sulfur content over 0.6 percent and ash content over 15 percent, which will push up high-quality coke consumption, bolstering its prices accordingly.

As SteelOrbis once reported on Sep 30, following a meeting held to discuss air pollution control, the authorities in China’s Hebei province have announced that by the end of 2015 the overall annual output capacities of pig iron and crude steel in the province will be cut by 14.47 million mt and 15.86 million mt respectively, while annual coal consumption in the province is to be reduced by 8.75 million mt over the same period.

Moreover, by the end of 2017 Hebei province will reduce its overall annual output capacities of pig iron and crude steel by 66.72 million mt and 67.26 million mt respectively, while annual coal consumption in Hebei will be cut by 40.34 million mt over the same period.

In addition to local governments’ measures to curb high pollution industry capacities, especially steel industry, China will take environment tax into consideration. The environment tax is believed to end lives of small steel enterprises with backward technology, improving long-existed overcapacity issue in China. Furthermore, additional tax will increase production cost of steelmakers, which will provide certain support to steel prices.

Despite market participants have launched a heated discussion on impact of environment protection, the influence on steel industry is still uncertain, which will largely depend on how government to implement its policies in the future.

 

Eunice Ouyang

Editor, SteelOrbis China


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