September 06, 2008

NDRC urges strict implementation of obsolete capacity elimination

China’s National Development and Reform Commission, in an announcement released recently, has urged strict implementation of obsolete capacity elimination.

At a State Council conference held earlier on Apr 27th NDRC had revealed that 10 provinces or municipalities Beijing, Hebei, Shanxi, Liaoning, Jiangsu, Zhejiang, Jiangxi, Shandong, Henan, Xinjiang, had signed first round of written commitments to shut down and eliminate outdated iron making capacity and obsolete steelmaking capacity of 39.86 million tonnes and 41.67 million tonnes respectively in the next five year, with 22.55 million tonnes and 24.23 million tonnes to be closed down by the end of 2007. Hebei, Shanxi, Henan, Jiangsu and Shandong are responsible for 70% of China's outdated iron making capacity and 50% of obsolete steelmaking capacity.

So far the 10 provinces or municipalities have washed out 9.69 million tonnes of outdated iron making capacity and 8.73 million tonnes of obsolete steelmaking capacity, accounting for 43% and 36% respectively of the target. Shanxi Province has washed out another 2.98 million tons of outdated iron making capacity and Ma’anshan Steel, which is not included in the first round of written commitments, has also shut down five 300 cubic meter blast furnaces with total iron making capacity of 1.75 million tonnes.

However, according to NDRC, some enterprises reconstruct those would-be eliminated equipments and expand production scale to ward off the elimination; some only suspend productions and can resume operation at any moment; some sell outdated equipments to other regions; some switch iron making blast furnaces to the productions of ductile iron pipes and ferroalloy, which are already severely oversupplied. These problems all weaken the effectiveness of elimination.

NDRC thus urged local governments to strictly carry out and supervise the elimination to prevent these measures. NDRC also nailed down the detailed standard: blast furnaces, converters, electric furnaces and affiliated equipments such as sintering and chimney should be demolished and the ground should be leveled off.

In the meanwhile it asked local governments to strengthen law enforcement and weed out unqualified enterprises in virtue of business license, manufacturing license and electricity and water supply.

(Sourced from MySteel.net)