SteelOrbis Shanghai
China has accelerated its capacity elimination works in recent weeks. The recent developments in this regard are as follows in the chronological order.
On October 19, 2007, China's National Development and Reform Commission (NDRC) announced the first official list of enterprises with out-of-date capacities in the calcium carbide, ferroalloy and coking sectors. All levels of government are required to put them into effect.
On October 23rd, regarding the problems experienced in the elimination process since April, the NDRC issued directives forbidding the transfer of out-of-date capacities to other regions. The document pointed out that in some regions, some enterprises use the out-of-date technology and equipment which has already been eliminated or earmarked for elimination as an instrument to invite new investments. Such a course is likely to disrupt the government's plans regarding these issues. As a result, there will be a strict clampdown on any efforts to transfer dated capacities.
The NDRC has made clear its determination to eliminate out-of-date production capacities, and this time it will not be fighting a lone battle. Both before and after the 17th Congress of the Chinese Communist Party, many provincial and municipal leaders were removed from their positions, and this is expected to facilitate the NDRC's capacity elimination drive.
Hebei Province is a major steel production base in China. After the 17th Congress, the party chief in the city of Handan summoned 11 enterprise bosses operating in sectors such as steel, coal, electricity and building materials, and issued them with targets in the areas of energy conservation and pollution reduction. The enterprises which fail to reach their targets within the given period will be shut down without appeal.
On October 25th, Shaanxi Province held a conference by videophone on the issues of energy conservation and reduction of pollution. During this conference, vice governor Hong Feng stressed that the authorities in cities across the province would have to achieve their 2007 energy-saving targets without fail within a period of 60 days.
On November 1st, Shanxi Province's environment protection bureau announced its second list of enterprises or facilities which are to be subjected to the "three stops" strategy - i.e. stop loans, stop electricity supply and stop transportation. Eight enterprises or facilities including Shanxi Hongda Steel & Iron Co., Ltd. are being targeted by the strategy in question due to their refusal to close.
At the end of October, the relevants departments in Zhejiang Province verified the elimination processes regarding the out-of-date capacities of four mini mills. Thus, the 15 enterprises in the province which were listed for elimination have actually been eliminated and closed accordingly. In short, Zhejiang Province has fulfilled its targets two months ahead of schedule, eliminating capacities totaling 1.13 million mt.
In addition, other provinces and cities, such as Guangdong, Fujian, Liaoning, Jiangsu and others, are also actively participating in the elimination of out-of-date steel capacities.
As a result of the above-mentioned efforts, through the active participation of all levels of governments, tangible results are being seen in the elimination of out-of-date steel capacities in China.