China’s MIIT issues stricter capacity replacement draft plan for steel sector

Thursday, 17 December 2020 15:42:03 (GMT+3)   |   Shanghai

China’s Ministry of Industry and Information Technology (MIIT) has issued its draft plan of measures for the implementation of capacity replacement in the Chinese steel industry, announcing that key areas-including Beijing, Tianjin, Hebei Province, the Yangtze River Delta area, Pearl River Delta, the Fen-wei plains and other key cities in Hebei, Henan, Shanxi and Shandong Province (Shijiazhuang, Tangshan and Langfang etc.), will not be able to replace their old steel capacities as previously, while the new rules are stricter.

In particular, mills in these areas will be able to add capacities only in the proportion of 1.5:1, while previously the proportion was 1.25:1. This means that, if a company wants to build a new 1 million mt capacity blast furnace, it will have to eliminate 1.5 million mt of current capacity. In cases of mergers and acquisitions, the replacement ratio will be still 1.25 in the mentioned areas.

The rule that companies switching to more eco-friendly production - from BFs/BOFs to EAFs - will remain the same as previously - they will be able to replace capacities in the proportion of 1:1.

Meanwhile, regions, including provinces, cities and districts, which cannot achieve control targets will not be able to accept capacities from other regions for the purposes of capacity replacement.

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