China to reduce ferroalloy capacity 25% in 5 years

SteelOrbis Shanghai China plans to reduce its ferroalloy production capacity to 17 million metric tons by 2010, 25 percent lower compared with that in 2005, to keep it in line with the market demand. The National Development and Reform Commission pointed out in the Notice on Accelerating the Restructuring of Ferroalloy Industry that Chinese ferroalloy industry should not allow to projects with smaller than 25,000 V, or larger than 25,000 kV electric furnaces during the 11th Five-Year Development Plan. Furthermore, the projects should meet the requirements on environment protection, energy consumption and similar issues. The existing ferroalloy producers have to restructure their facilities and meet relevant requirements in the specified time. By 2010, the output of large ferroalloy producers with over 100,000 tons annual ferroalloy production capacity will account for more than 40 percent of total production in China. Yet, the investments of the ferroalloy industry will also be under strict control. The investment management body will not approve the investment projects which do not meet relevant requirements, and financial institutions will not grant bank loans for those projects. Although China accounts for 40 percent of the global ferroalloy output, 30 percent of the consumption and 30 percent of the export volume, the country also faces some problems such as oversupply, outdated equipment, severe environmental pollution and low concentration in production.