China, the world's largest steel producer, should use capacity management as the main means to solve the imbalance between supply and demand, He Wenbo, executive chairman of the China Iron and Steel Association (CISA), said at the 19th China Steel Industry Chain Market Summit. At the same time, steel mills need to transition to low-carbon production to ensure long-term viability.
This means that steel production capacity in China will need to be reduced during the transition period to achieve carbon reduction targets, and steel mills may facilitate mergers and reorganizations to increase the concentration of production capacity.
He noted that conditions are not conducive to maintaining a high share of exports, but the government will encourage the export of products with high added value. He said product exports are driven by market, supply chain or industrial investment, while high value-added steel exports are supply chain driven exports. Intense competition in the international market and trade barriers are hampering the export of conventional steel products from China, he adds.
As of 2023, approximately 380 million tons of steelmaking capacity will be built within a 100-kilometer radius of China's coastline. In recent years, this figure will finally be increased to 400 million tons per year, almost meeting the government's planning requirements for the coastal steel industry. This also means that the domestic steel industry will be overvalued.
According to him, the essence of the transformation of the steel industry is a green transformation. The five objectives promoted by China's steel industry include ultra-low emissions, improving energy efficiency, developing a carbon-neutral route, improving the EPD of the steel industry, and accelerating research on low-carbon steel standards.
CISA plans to launch a new “Cornerstone Plan”, the main goal of which is to explore and use future resources (mainly iron ore resources) for low-carbon transformation of steelmaking processes in terms of type and grade. It is still about sourcing steel raw materials, but the focus has shifted from total quantity to variety to be closer to the raw steel raw material needs.
According to CISA, the current Cornerstone Plan has stimulated the development of production of approximately 50 million tons/year of additional iron ore concentrate in China.
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