Rizhao Steel Holding Group Co, a privately-owned steel producer in East China’s Shandong province, will add on 5 million tonnes/year ironmaking capacity via building two 3,000 cu m blast furnaces, a company official confirmed on December 4.
The new facilities will be erected at the steel producer’s existing steelworks in Lanshan district of Rizhao city, Shandong, and the construction works will commence in 2020, with two starting at the same time, according to the company official, confirming that with the new blast furnaces, Rizhao Steel’s ironmaking capacity will be expanded to 20 million t/y.
Over November 13-December 10, the old-for-new capacity swap for the Rizhao Steel project is under public review, according to an official release from the Department of Industry and Information Technology of Shandong Province, in which it suggested the completion date of the two furnaces would be by 2022, though a source close to Rizhao Steel disclosed that “it will be much earlier than that”.
It has been a common practice as Beijing’s part of the efforts in dealing with excess steel capacity since 2016 that all the new iron/steelmaking capacities should be replacing old capacities at an equivalent or 1.25 times higher depending on the location of the steel mills, Mysteel Global understands, and for Hebei, China’s top steelmaking province, for example, the trade-in ratio is 1:1.25.
To legitimize the new construction, Rizhao Steel bought related old capacity quotas from two steelmakers in Shandong – Shandong Guangfu Group Co and Shandong Chuanyang Group Co – as stated in the government notice, which cost Rizhao Steel Yuan 6.5 billion ($921 million), according to the company official.
Together with the blast furnaces, Rizhao Steel will also build two converters or 6 million t/y of steelmaking capacity in total, and the source close to the mills shared that the converters have been completed construction.
Rizhao City, a coastal city in Shandong, will have two new steel projects built if Rizhao Steel’s expansion project passes all the related approval, as meanwhile, the state-owned Shandong Iron & Steel Group is also constructing its 19 million t/y greenfield Rizhao steelworks to produce high-end flat steel products, as Mysteel Global reported.
Once both the projects completed, Rizhao will be boasting a total 40 million tonnes/year of crude steel capacity with the existing and new, or half of Shandong’s steel capacity then.
Shandong is China’s third largest steelmaking province after North China’s Hebei province and East China’s Jiangsu province in terms of 2018 steel production when it produced 71.8 million tonnes of crude steel, up 0.4% on year, or accounting for 7.7% of the country’s total.
This article has been published under article exchange agreement between Mysteel Global & SteelMint.
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