In the context of carbon neutralization, steel de capacity is being repeatedly emphasized. Recently, the national development and Reform Commission and the Ministry of industry and information technology announced that a nationwide “look back” inspection on steel de capacity and crude steel output reduction will be organized in 2021. Previously, Xiao Yaqing, Minister of the Ministry of industry and information technology, also said that around the “double carbon” goal, we should resolutely reduce the output of crude steel. Five years after the capacity reduction, the steel industry is also facing new changes and challenges.
Increasing the concentration of iron and steel industry
“Starting from 2016, we will reduce the crude steel production capacity by 100-150 million tons in five years.” This is the previous “State Council on the iron and steel industry to resolve overcapacity to achieve the development of” proposed work objectives. Xiao Yaqing introduced at a news conference on March 1 this year that since 2016, the strategy of “three removal, one reduction and one supplement” has made obvious progress in reducing steel production capacity, which has reduced 170 million tons of steel production capacity. In order to better carry out the next stage of capacity removal, in 2021, China’s new implementation measures for steel capacity replacement and steel project filing and other important documents will be issued to ensure that the total steel capacity will only decrease but not increase.
This year’s work of “looking back” on iron and steel de capacity will focus on checking the implementation of iron and steel de capacity work and rectification in relevant regions since 2016, the key of which is to resolve the excess capacity of iron and steel and strike down the shutdown and exit of smelting equipment involved in “ground bar steel”.
Qin yuan, an economic expert, told Beijing Business Daily that in the past five years, the “ditiao steel” has been eliminated from the market. In addition, some of the “zombie steel enterprises” have been cleared, and the other part has been rejuvenated because of the integration. The concentration of the steel industry has been continuously improved, and the assets and liabilities of a large number of steel enterprises have also been improved and repaired.
Although remarkable results have been achieved, the national development and Reform Commission and the Ministry of industry and information technology also pointed out that some deep-seated contradictions in the industry have not been fundamentally solved. At the same time, with the improvement of the efficiency of the iron and steel industry, some localities and enterprises have the impulse to blindly build iron and steel projects, and consolidating the results of de production is facing new challenges. The purpose of this work is to guide the iron and steel enterprises to abandon the extensive development mode of winning by quantity and promote the high-quality development of the iron and steel industry.
In this regard, Qin Yuan said that with the clearance of poor enterprises, the profits of the whole industry are improving, and the enterprises have a strong desire to increase production. Although the trend of integration is developing, it also means that it is more difficult to integrate. It is understood that this work will also cover the construction and operation of iron and steel smelting projects, as well as the rectification and implementation of problems found in previous inspections. This year’s crude steel output reduction work will focus on reducing the crude steel output of enterprises with poor environmental performance, high energy consumption and relatively backward technology and equipment level, so as to ensure the year-on-year decline of national crude steel output in 2021.
Capacity reduction and yield increase
Although the steel production capacity will be further compressed, according to Langer steel, the national steel consumption demand will continue to grow in 2021, and the total demand for crude steel in China may reach 1.1 billion tons, an increase of about 5% over last year. Data from the National Bureau of statistics also showed that from January to February, domestic pig iron production increased by 6.4% year-on-year, and crude steel production increased by 12.9% year-on-year.
In response, Xiao Yaqing said that the demand for rapid economic recovery, resumption of production and various aspects of construction has a great demand for large quantities of raw and auxiliary materials, including steel. In addition, the actual per capita consumption of iron and steel is still in the process of development compared with the total economy, and there is still a lot of room for the development of construction and automobile transportation.
In an interview with Beijing business daily, Cheng Yu, a senior researcher of understanding Research Institute, analyzed that the de capacity is completed with the expansion of demand. Stimulated by the development of real estate and automobile industry, the demand for steel is still strong, which also creates a better profit environment for steel mills to increase investment and scrap unnecessary capacity in advance.
And this year, the short board and infrastructure investment will also be an important starting point for stable economic growth, and the real estate investment will continue to grow, which will also make China’s domestic steel consumption continue to be strengthened in 2021. Qin yuan also believes that the current price of steel is still rising, and the policy also meets the domestic demand by reducing export tax rebate and increasing imports.
Meet new challenges under the goal of “double carbon”
In order to achieve the goals of “reaching the peak of carbon” and “carbon neutralization”, Xiao Yaqing made it clear at the end of December last year that he should implement industrial low-carbon action and green manufacturing engineering around the target nodes of “reaching the peak of carbon” and “carbon neutralization”. As an energy intensive industry, iron and steel industry should firmly reduce the output of crude steel to ensure that the output of crude steel decreases year on year.
In Qin yuan’s view, the pressure of the steel industry under the “double carbon” goal needs to be looked at separately: “in terms of reaching the peak of carbon, the pressure may not be too great. With the substitution of short process for long process, it is also conducive to carbon emission reduction. In the production of steel, there are still many places to reduce carbon emissions, which is why many steel enterprises set the carbon peak time earlier than 2030. “
More carbon neutral pressure on some steel industries. Qin yuan believes that the carbon emission of long process steel production is an unavoidable thing, which requires a relatively large upgrade of the steel industry process. But because the time is later, it also depends on how the iron and steel industry achieves the peak of carbon.
At the same time, we should see that the steel industry in the process of de capacity is still huge and is facing pressure. Hu Wenrui, academician of the Chinese Academy of engineering, also stressed at the recently held 2021 (12th) China Iron and Steel Development Forum: “the iron and steel industry is the largest carbon emission industry among the 31 categories of manufacturing industry, accounting for about 15% of the total emissions.”
Although the carbon dioxide emission per ton of steel in China is declining, the total amount is still relatively large. Xiao Yaqing said earlier that at present, the average coal consumption per ton of steel in the world is 575kg of standard coal, while that in China is 545kg. Because of China’s large volume, there is still potential to be tapped in terms of energy conservation and emission reduction.
Cheng Yu said that under the requirement of “double carbon”, the iron and steel industry needs to constantly change the energy structure and energy efficiency, but at the same time, changing the energy structure also means changing the metallurgical process, which is a huge investment. A lot of originally qualified but not yet fully depreciated capacity will also be eliminated in advance, so the profits of steel plants will still face challenges.
Beijing Business Daily reporter Tao Feng intern reporter Ruan Hangda
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