China's new and stricter steel capacity swap ratios will cool the overheated steelmaking raw materials market and pave the way for more electric-arc furnaces to be used in its mammoth steel industry, market sources told Fastmarkets this week.
The country's Ministry of Industry and Information Technology (MIIT) updated regulations for steelmaking capacity swaps on Thursday May 6 to firmly reduce steel production and ban new capacity from June 1.
Tighter ratios, wider region
In a government document issued in 2017, the Beijing-Tianjin-Hebei region, Yangtze River Delta and Pearl River Delta in southern China were listed as environmentally sensitive areas because of the heavy pollution generated by the industries located there.
In the document, mills in these regions were required to relocate or upgrade their capacity from city center to suburb or special industrial parks based on a ratio of 1.25:1. For instance, this means that a mill with 1.25 million tonnes per year of existing capacity must shut down its old facilities before starting production at its 1-million-tpy replacement capacity elsewhere.
In the latest document issued by the MIIT on Thursday, the Chinese government...