Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Focusing on accelerating the green and low-carbon development of the Chinese steel industry, more steel industry reforms are expected in China by the end of 2022. Further consolidation of the steel industry is being planning, according to the two vision documents under discussion, stated local media reports.


Implementation plan for carbon peaking in the iron and steel industry and Guiding opinions on promoting the high-quality development of the industry is expected to be released before the end of 2021.


The authorities’ rigor on supply-side reform will continue into 2022 with the introduction of these guidelines, now referred to as Plan and Opinion.


The first draft of the Plan was completed in July, which clarifies the industry’s path to carbon peak and carbon reduction, which is being discussed and improved.


In the draft of the Opinions released in December 2020 emphasis was on carbon emission reduction, ensuring the supply of raw materials, accelerating merger and reorganization of the steel industry.


It is expected that during the 14th five-year plan, the domestic iron ore concentrate output will rise by more than 100mn mt. At the same time, China will focus on developing high-quality iron ore from projects such as Simandou.


The Opinions also focused on optimizing the structure of the steel industry by building a number of super-large iron and steel enterprise groups, which are world-class in terms of technology.


In 2020, the industry concentration of China’s top 10 steel companies was 39.2pc, which is below that of Japan, the US, South Korea and other nations. During the 14th five-year plan China aims to achieve a 40pc industrial concentration with the top five steelmakers and a 60pc industrial concentration with the top 10 steelmakers. The idea is to eliminate or reorganize regional and small steel mills in some areas.


In terms of process optimization, the development of electric furnace (EAF) steel mills will be promoted for sustainable development combined with the policies for electricity pricing and continued emphasis on capacity replacement, carbon emissions and environmental protection.

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