Interfax China reported that China's Ministry of Industry and Information Technology released a number of lists on its official Web site on August 8 containing details about domestic steel and nonferrous metals facilities that have been classified as outdated and set to be phased out by the end of the year.
According to the announcement, 35.25 million tonnes of capacity is to be eliminated through the closure of blast furnaces, used in the production of pig iron, smaller than 380 cubic meters. A further 8.76 millions tonnes of capacity will also be eliminated by shutting down outdated converters, electric furnaces, electric arc furnaces, intermediate frequency furnaces and cupola furnaces all of which are used to produce crude steel.
Around 25.87 millions tonnes of capacity will be eliminated from the coke sector along with 17.19 million tonnes of ferroalloy production capacity. Furthermore, some 371,010 tonnes of primary aluminum production capacity will be shut down as will 144,900 tonnes of copper smelting capacity, 265,800 tonnes of lead smelting capacity and 293,700 tonnes of zinc smelting capacity.
Mr Yu Liangui analyst of Mysteel said that this demonstrates the determination of China's central government to regulate the domestic industry as this is the first time they have released the names of companies whose facilities will be subject to closure. The disclosure of company names will make the move more transparent and help to heighten public awareness.
Mr Yu said that the government has scrapped preferential power tariffs and tightened regulations for credit and bank loans. He feels that the elimination of these facilities will not have an impact on China's total steelmaking capacity. The country is still undergoing development and demand is sure to grow. He said that much more advanced facilities are being built, so China will maintain its large production capacity.
According to him, China's central government aims to eliminate blast furnaces smaller than 300 cubic meters and electric furnaces incapable of producing over 20 tonnes of crude steel per production cycle by the end of 2010. By the end of 2011, blast furnaces smaller than 400 cubic meters and electric furnaces incapable of producing over 30 tonnes of crude steel per production cycle will be eradicated.
The MIIT announced in May of this year that, by then end of 2010, it will have eliminated 30 million tonnes of pig iron capacity, 8.25 million tonnes of crude steel capacity, 339,000 tonnes of primary aluminum production capacity, 117,000 tonnes of copper smelting capacity, 113,000 tonnes of zinc smelting capacity and 243,000 tonnes of lead smelting capacity.
Mr Wang Lixin analyst of Umetal said that the government's decision to reveal company names shows they are making a concerted effort to regulate the industry, but she told Interfax that the relatively small scale of facilities set for closure will have little impact
China's central government released guidelines at the beginning of 2009 stating its aim of eliminate around 800,000 tonnes of outdated primary aluminum smelting capacity, 300,000 tonnes of copper smelting capacity, and 400,000 tonnes of both lead and zinc smelting capacity within the next 3 years.
Mr Duan Shaofu director at the China Nonferrous Metals Association's copper department said that there is currently very little outdated copper smelting capacity as much of it was eliminated during the global economic downturn.
Mr Duan said that as the majority of the companies with outdated facilities are small-sized and have unstable production, refined copper output will also not feel any effect as a result of the closures.
(Sourced from Interfax China)
