Min­istry is­sues plans for higher qual­ity steel and for­eign eq­uity

China Daily (USA) - - BUSINESS - By YANG ZIMAN yangz­i­man@chi­nadaily.com.cn

For­eign com­pa­nies will be en­cour­aged to par­tic­i­pate in the re­or­ga­ni­za­tion of Chi­nese steel com­pa­nies, un­der a plan to boost prod­uct qual­ity re­leased by the Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy.

The devel­op­ment plan of iron and steel (2016-20) says that Chi­nese steel com­pa­nies must be fur­ther in­ter­na­tion­al­ized through eq­uity shar­ing and in­vest­ment, to im­prove prod­uct qual­ity and man­age­ment.

Chi­nese steel com­pa­nies will be en­cour­aged to build pro­duc­tion and pro­cess­ing bases in key mar­kets for the Belt and Road Ini­tia­tive that have good nat­u­ral re­sources and mar­ket po­ten­tial, and are also home to high-speed train and power projects. For­eign com­pa­nies are in­vited to join the process to un­der­take projects in coun­tries along the Belt and Road.

Ac­cord­ing to re­search by the China Me­tal­lur­gi­cal In­dus­try Plan­ning and Re­search In­sti­tute, the con­struc­tion of rail­way, road, oil and gas pipe­lines will drive up the de­mand for steel in the Belt & Road coun­tries.

Ac­cord­ing to the re­port, ev­ery 100 mil­lion yuan ($14.64 mil­lion) of rail­way con­struc­tion will bring about de­mand for 3,300 met­ric tons of steel. The Belt & Road coun­tries are to build 26,000 kilo­me­ters of rail­way for high-speed trains, re­quir­ing ap­prox­i­mately 85.8 mil­lion tons of steel.

“More than 70 per­cent of the Belt & Road coun­tries are net im­porters of steel and are the main ex­port des­ti­na­tions of China. In ad­di­tion, the con­struc­tion projects in these coun­tries will in­di­rectly pull up steel ex­ports,” said Li Xinchuang, pres­i­dent of the in­sti­tute.

Un­der the plan, the amount of crude steel ca­pac­ity in China is to be less than one bil­lion tons by 2020, a cut of 150 mil­lion tons as de­mand for the com­mod­ity drops.

“Global con­sump­tion and out­put of crude steel in 2020 will be around 1.6 bil­lion tons. The de­mand for steel will re­main gen­er­ally sta­ble and rise very mod­er­ately,” says the plan.

Xin Guobin, vice-min­is­ter of the Min­istry of In­dus­try and In­for­ma­tion Tech­nol­ogy, said that the steel in­dus­try must adopt in­tel­li­gent man­u­fac­tur­ing to re­form it­self. “We have over­ca­pac­ity in low-end prod­ucts while the high qual­ity prod­ucts are still lack­ing. The Chi­nese econ­omy needs more so­phis­ti­cated steel prod­ucts for more tech­nol­ogy-ori­ented in­dus­trial devel­op­ment.”

Do­mes­tic con­sump­tion of crude steel is ex­pected to be 650-700 mil­lion tons by 2020, less than the es­ti­mated out­put of 750-800 mil­lion tons.

The plan also re­quires en­ergy con­sump­tion in the steel in­dus­try to be re­duced by more than 10 per­cent and ma­jor pol­lu­tants must be cut by more than 15 per­cent.

The 10 big­gest steel com­pa­nies are pre­dicted to make up about 60 per­cent of the in­dus­try by 2020, up from the cur­rent 34 per­cent.

The num­ber of steel com­pa­nies is to be re­duced as ef­forts are con­cen­trated on build­ing high-qual­ity steel bases in Zhen­jiang Port (Guangzhou) and Fangcheng­gang Port (the Guangxi Zhuang au­tonomous re­gion).

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