China’s Jiangsu Province to Move Steel Mills to Coast amid its Efficiency Drive

According to a provincial government document, east China’s Jiangsu Province, the country’s second-largest steelmaking province, will require steel mills to move to two new areas on the coast in the next few years in order to reduce pollution and to make the industry more efficient.

After getting rid of outdated excess capacity, this measure has been announced by the government with an intention to upgrade and streamline its polluting industries in Jiangsu province.

The province plans to create two steelmaking hubs focusing on high-quality steel production and to relocate steel mills through merger and capacity trading.

Jiangsu which accounts for about 12.5% of China’s crude steel output has explicitly ordered the city of Xuzhou to cut the number of steel mills in the city from the current number of 18 to under 10 by the end of 2018 and consolidate the remaining into one to two companies by 2020. In April 2018, at least three steel mills were ordered to close in Xuzhou.

The province will guide and encourage steel companies to adopt electric-arc furnaces (EAFs) and to produce high-end steel products used in military defence, rail, nuclear, aerospace and new energy vehicles industries,” the document said. Electric-arc furnaces, or mini-mills, emit far less harmful air than traditional blast furnaces which use coking coal as fuel.

The move is similar to the plan outlined by North China’s Hebei Province, the country’s top steel producing province, earlier this year.

Chinese mills recording high production despite output curbs

According to the latest reports, China’s steel output rose in July to a fourth straight monthly record despite anti-smog measures imposed by local governments. The Chinese mills have churned out 81.24 MnT of steel output IN Jul’18, up by 7.2% y-o-y basis and 1.3% against Jun’18 as per the data from NBS (National Bureau of Statistics).

According to the industry experts, the reason for rise in China’s crude steel output despite environmental crackdown is that steel mills have improved their production efficiency by using higher grades of iron ore and adding more scrap steel to churn out more products.

From Jan to Jul’18, China’s crude steel output touched 532.85 MnT, recording a growth of 6.3% against the corresponding period of the previous year 2017.