China makes 45% of the world’s iron and steel, and is expected to remain the world's largest steelmaking country for years to come. In a drive for industrial consolidation, China is phasing out up to 7.7 million tonnes per year of outdated steel production capacity in by the end of 2012.
The move comes at a time when the industry is ripe for consolidation due to overcapacity and slackening demand. China’s Ministry of Industry and Information Technology (MIIT) has notified the affected sites, chiefly consisting of smaller electric arc furnaces (less than 50 tonnes per load capacity). In addition to the steel industry, MIIT also announced the closure of outdated production capacity in 18 other industrial sectors such as the production of iron, coke, ferroalloy, aluminium, copper, lead, zinc, cement, paper and alcohol.
'From large to strong'
Speaking at the World Steel Association’s ‘LCA and Steel’ Seminar in Beijing July 2012, Zhang Changfu, Secretary General of China Iron and Steel Association said “conditions are ripe for the industry to turn itself from being ‘large’ in terms of size to ‘strong’ in terms of quality and competitiveness.”
Secretary General Changfu said technological innovation will be stepped up, again, and many achievements have been made by China’s research institutions set up within companies (exempted from taxes on imported equipment and materials for R&D). He noted:
- Of the top 10 state-accredited enterprise technology centres in the 2011 assessment, four are from the iron and steel industry
- Of the top 10 enterprise technology centres in terms of spending on science and technology, three are from the iron and steel industry
- Of the top 30 such centres in terms of the number of patents held, five are from the iron and steel industry
This is backed by official government policy. Under the 12th Plan the iron and steel industry should meet the needs of strategic emerging industries, namely:
- Energy conservation & environmental protection
- New-generation information technology
- BiotechnologyHigh-end equipment manufacturing
- New energy
- New materials
- New energy vehicles