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Turkey lifts provisional safeguard measures on South Korean steel
Yonhap reported that South Korea’s Ministry of Trade, Industry and Energy announced that Turkey has lifted its provisional safeguard measure against steel products imported from South Korea and other countries, paving the way for South Korean steelmakers to ship more to the country. The trade ministry said lifting of safeguard measure will provide South Korean auto plants in Turkey with stable supplies of necessary materials.
Turkey implemented a provisional safeguard measure on five imported steel products in October, last year, by slapping a 25% tariff on the volume exceeding the average imported volume of from 2015 to 2017. The provisional move came amid concerns over a possible influx of steel products into the country as a consequence of protectionist moves by the United States and the European Union.
Last year, South Korean steelmakers shipped some 820,000 tonnes of steel products, valued at USD 850 million.
Source : Yonhap
EUROFER update on construction industry in Europe
The EU construction sector registered robust growth in the growth in the fourth quarter of 2018, although the rate of expansion was less vigorous than in the previous quarters of 2018. EU production activity rose by 4.3% YoY in the fourth quarter of 2018, bringing total growth over the whole year 2018 to 4.8%. This growth rate is equal to the pace of expansion registered in 2017. The EU construction industry was one of best performing steel using sectors over the past two years.
In the fourth quarter of 2018, construction output rose in almost all reporting countries; only in Sweden did production activity fall compared with the same period of 2017. Output growth was particularly strong in Central Europe; Poland and Hungary registered double-digit rates of expansion. Activity rose at a solid pace in most western European countries, despite a mild moderation in the YoY growth rate in the final quarter, in comparison with the first three quarters of the year. Meanwhile, construction activity in the UK grew only slightly in the fourth quarter of 2018, reflecting falling order intakes and sentiment increasingly coming under pressure on a par with economic indicators and heightened political and economic risks.
In Western Europe, solid demand for residential and non-residential buildings remained the most important growth driver of production activity in the construction sector. The residential property market in most western European countries has staged a rebound over the past few years. In some countries there are even signs of overheating; the existing tightness in supply of affordable housing has been exacerbated by the migrant inflows. The sector itself is facing capacity issues, not only with regards to production capacities but even more so with respect to the availability of skilled labour. Moreover, in several countries the public authorities have long backlogs in granting building permits.
Non-residential construction demand has benefitted from rising private and public investment. The strong performance of the housing sector and the resulting increase in the number of new dwellings and the upgrading of the existing housing stock has led to the development of new retail and leisure projects. Instead, the general economic rebound has driven demand from companies in industry and services for storage and logistic facilities, offices, commercial and industrial buildings. For similar reasons, publicly funded non-residential investment in healthcare, education and other community services has also risen.
In the Central European countries, the most important driver of construction activity growth is infrastructure demand. The availability of EU funding, as well as the improving economic performance of the main economies in the region and as a consequence larger domestic budgets for infrastructure work, has supported new civil engineering projects and the renovation and modernisation of existing infrastructure. The upsurge in residential and non-residential activity is also gaining momentum.
Construction industry forecast 2019-2020
The outlook for the construction industry is relatively positive, despite the fact that this sector also will feel the impact of weakening economic fundamentals in the EU. As a consequence, growth in construction investment is expected to moderate in 2019 and 2020. Nevertheless, taking into account that construction companies in the EU have remained rather positive in their assessment of current and expected workloads, the slowdown in construction activity growth will be gradual and rather mild. Particularly in 2019, significant order backlogs will guarantee healthy level of capacity utilisation in the sector.
Demand for residential projects will continue to be strong, although the boom conditions as seen in several countries in the recent past will come to an end. Housing demand is supported by relatively high levels of consumer confidence, rising wages and still low cost of financing. Demand for both new work and renovation and modernisation activities will continue to grow. The non- residential sector is at risk of a more pronounced slowdown in private construction investment, reflecting higher levels of business uncertainty in general and rising concerns on the performance of the export sector in the EU in particular. The unknown impact of Brexit and the potentially damaging effect of global protectionism are the major factors influencing corporate investment decisions.
Public construction investment in non-residential and civil engineering projects will remain a growth driver over the forecast period. Several national governments have launched construction programmes geared at improving the country’s transport, energy and digital infrastructure. Examples are the ‘Grand Paris’ scheme in France, railway maintenance, electrification and development programmes in Italy as well as the completion of projects recently started or underway in Central Europe. A general trend across the EU is the support for projects aimed at enhancing the energy efficiency of residential and non-residential buildings.
Meanwhile, supply constraints will remain an issue for the time being. This implies that potential production growth is limited by the tightness of production capacity in the sector as well as by serious labour shortages.
Total EU output is forecast to rise by 2.1% in 2019 and by 1.7% in 2020.
Source : Strategic Research Institute
Noront chooses Algoma site in for new ferrochrome facility
The Canadian Press reported that Noront Resources Ltdt has chosen the Algoma Steel Inc site in Sault Ste Marie Ontario for its ferrochrome production facility. The company says it picked the location over a spot in Timmins, Ont. Noront says Timmins would have had a slightly lower capital cost, but the Sault Ste. Marie option offered a lower operating cost per pound of chrome in ferrochrome.
The company is looking to develop its chromite properties in the so-called Ring of Fire area in northern Ontario.
It says it anticipates a lengthy and comprehensive environmental permitting process with project construction not expected to begin until 2025, based on a preliminary schedule.
Noront says the next step will be to finalize the development plan and timelines for an all-season road to the Ring of Fire.
Source : The Canadian Press
Bangladesh is now self sufficient in steel billet production - BSMA
The Daily Star reported that Md Shahidullah, secretary general of Bangladesh Steel Manufacturers Association, said that Bangladesh has become self-sufficient in billet manufacturing on the back of huge investment made by large steel mills, which bumped up their production capacity. He said “Five years ago, steel mills had to import half the total requirement for billet to make steel to feed the domestic market. Local mills now produce around 6 million tonnes of billet annually, enough to manufacture 5.5 million tonnes of rods.”
The expansion spree by the BSRM, Abul Khair Steel, GPH Ispat, KSRM, Metrocem and Anwar Ispat in recent years has enabled the country to reduce its reliance on imports for billet. Today, 35 mills make billet by importing scrap,
Bangladesh used to import billet mainly from China, the US and India when it produced billet below its annual requirement. Now the import demand for billet is insignificant. Billet import fell to 1.65 lakh tonnes in 2017-18 from 1.696 million tonnes in 2014-15.
Source : The Daily Star
Hong Kong exchange plans metal warehouse in China
Reuters reported that Hong Kong stock exchange Chief Executive Mr Charles Li said that the bourse was in official talks with Guangdong authorities on metals warehousing, a major step towards its long-held ambition to expand in mainland China. He said “We have been talking about LME warehousing in China, it’s not going to be an easy subject. We are working with the Guangdong government to see if we can experiment a pilot scheme for warehousing.”
He said “The plan involving Guangdong, a province in southern China, would come under the country’s Greater Bay Area project. The project aims to better integrate the economies of Guangdong and Hong Kong, spurring growth in both regions.”
Mr Li, head of Hong Kong Exchanges and Clearing Ltd, has long wanted a China warehousing foothold to boost its London Metal Exchange franchise, but faced reluctance from Chinese regulators concerned with protecting emerging domestic exchanges in the world’s biggest metals consumer.
Warehouses are a critical part of the LME’s price-setting function because it acts as a market of last resort; a place of storage for sellers in need; and a store of metal for buyers in a mechanism that roots exchange prices in the physical market.
Source : Reuters
RHI Magnesita steel division revenue flat in Q1
Refractory product supplier RHI Magnesita said revenues in its steel division were flat in the first quarter, with growth in North America and Asia offsetting weaker deliveries in Europe and South America. A slower start' to the quarter had resulted in some build-up in inventories within the group overall, though they were expected to unwind as the year progressed. The company said that it remained confident of its overall expectations for the full year, after a solid trading performance across all of its divisions in the first quarter.
It said “Some uncertainties exist in the macroeconomic outlook and customer end markets, and management remains vigilant, particularly in terms of plant volumes and production costs.”
RHI Magnesita said it continued to achieve its integration plans and was on track to realise synergy targets of at least EUR 90 million in 2019 and EUR 110 million by 2020.
Source : Strategic Research Institute
Pakistan Steel Mills rolled back to privatisation list
The Daily Times reported Pakistan Tehreek-e-Insaf government during a meeting of the Economic Coordination Committee decided that Pakistan Steel Mills would soon be placed on the privatization list. The meeting was chaired by Prime Minister’s Adviser on Finance Dr Abdul Hafeez Sheikh.
The ECC also deliberated upon the summary submitted by the Ministry of Industries and Production on April 16 regarding the appointment of Transaction Advisory Consortium for the revival of PSM. During the meeting, the committee agreed to the proposal given by the Ministry of Industries and Production to privatise the steel mill.
The ministry was also directed to make a formal proposal in this regard.
Earlier this month, Minister of State for Parliamentary Affairs Ali Muhammad Khan had claimed before the National Assembly that the government was not considering plans to denationalise PSM.
Source : The Daily Times
Opkloppen bij Aperam
Er zijn universele signalen dat een bedrijf er niet lekker voorstaat. Een bedrijf dat de kwartaalcijfers in zijn persbericht niet naast die van een jaar geleden legt, is er zo een.
In het beste geval moffelt de onderneming in kwestie zo weg dat er een jaar geleden pijnlijke zaken in de cijfers zaten. Meestal is het andersom: juist de nieuwste cijfers zien er in vergelijking niet best uit.
Zo ook bij Aperam APAM€23,56-5,87% . De fabrikant van roestvast staal behaalde in het eerste kwartaal van dit jaar een brutobedrijfsresultaat (ebitda) van €81 mln. Het bedrijf vergelijkt dat niet met de cijfers van een jaar eerder, maar met het vierde kwartaal van 2018. Dat leverde €90 mln op, een daling van 10% dus.
Niet fraai, want Aperam beloofde in februari dat het een resultaat zou behalen dat 'vergelijkbaar' was met het vierde kwartaal. Je kunt twisten over het woord 'vergelijkbaar'. Maar Bartjens vermoedt zomaar dat u er geen genoegen neemt als een nieuwe werkgever u een 'vergelijkbaar' salaris belooft en vervolgens 10% minder overmaakt.
Nog minder fraai wordt het als we de cijfers van vorig jaar bekijken. Toen stond er een ebitda van €141 mln in de boeken. De werkelijke min is dus 43%.
Vooruit kijkend doet het staalbedrijf hetzelfde. Het belooft dat het tweede kwartaal van 2019 een hoger resultaat zal laten zien dan het eerste (€81 mln). Hoera, dip voorbij, kun je denken. Maar Aperam vermeldt niet of het meer zal zijn dan de €150 mln van het tweede kwartaal van 2018.
Dat alles is extra merkwaardig omdat Aperam winstdalingen regelmatig mede toeschrijft aan seizoenseffecten, dé reden om juist op jaarbasis te vergelijken.
Beleggers prikken daar uiteraard doorheen. Aperam, in 2011 afgesplitst van ArcelorMittal, presteerde de voorbije jaren behoorlijk op de beurs. Maar sinds begin oktober zit de klad erin. Het aandeel staat ondanks een opleving nu bijna 40% lager.
Aperam hoopt op herstel, onder meer door strengere Europese importregels om de toestroom van niet-Europees staal te beperken. Daarnaast werkt het aan een saneringsprogramma met de klinkende naam Leadership Journey ® Phase 3. Die moet het resultaat uiteindelijk met €200 mln op jaarbasis verbeteren. De teller stond aan het einde van het eerste kwartaal op €67 mln, dus nu nog een flinke stoot te gaan.
Alleen, Aperam wist naar eigen zeggen met fase 1 en 2 van de Leadership Journey ® al $575 mln (omgerekend zo'n €513 mln) te besparen. Meer dan wat Aperam momenteel per kwartaal verdient.
Waar andere bedrijven kosten besparen om hun winst te vergroten, is het bij Aperam nodig om überhaupt winst te maken.
Reageren? Mail naar firstname.lastname@example.org
2 steel projects being set up in Oman - Report
Oman Daily Observer reported that 2 greenfield steel projects are due to come on stream in Sohar and Salalah over the next two years in Oman as Moon Iron and Steel Company and Raysut Steel Industries are both making headway in the construction of modern steel mills in Sohar Industrial City and Raysut Industrial City respectively.
Misco is a steel billet and rebar manufacturing plant with an annual capacity of 1.2 million tonnes of billets and a rolling capacity of 1.1 million tonnes. Construction work on the project began early last year following the achievement of financial closure. Major civil and structural work has been completed at site, with equipment beginning to arrive from different parts of the world. Commercial production is envisioned in the fourth quarter of this year once agreement is reached on the type of energy that will be used as the primary fuel source for the project.
Source : Oman Daily Observer
Mjunction sells 9,000 tonnes of Mahindra’s automotive steel scrap
Autocar Pro reported that Mahindra & Mahindra has decided to make a shift from offline to online for selling the automotive steel scrap generated by its component manufacturers. Mjunction Services, India’s leading B2B e-commerce company, claims to have sold over 9,000 tonnes of scrap in 2018-2019 on its online platform for M&M. Buyers from Gujarat, Haryana, Madhya Pradesh, Maharashtra, Punjab, Uttar Pradesh and Uttarakhand participated in the e-auction of steel scrap at 12 auto component manufacturers of M&M.
Through this transparent e-auction process, Mjunction says it was able to deliver market prices for the steel scrap, helping M&M and its component manufacturers get a substantial increase over what they were receiving from the offline process.
Vinaya Varma, MD and CEO of Mjunction (pictured below), said, “This is part of our continued efforts to digitise sectors that still use age-old offline methods. Extensive market research has gone into identifying the right buyers and developing a platform for M&M.”
Source : Autocar Pro
HarbisonWalker targets 25% refractories capacity increase
AIST reported that Pittsburgh based US refractories manufacturer HarbisonWalker International is boosting production capacity by 25% at its key steel refractories plants as it looks to keep pace with demand from steel mills. It said “Much of the investments will focus on its White Cloud Mich plant, which will receive new warehouse and shipping space. The expansion also includes a new brick press and packaging line, as well as manufacturing technologies that will improve production efficiency and worker safety.”
HarbisonWalker CEO Ms Carol Jackson said “The improvements will further optimize production, product quality, and delivery efficiencies for our steel customers. The new press and warehouse increase our capacity to supply our industry-leading products, including mag carbon brick for steel ladles, electric arc furnaces and basic oxygen furnaces. The new packaging line allows for increased handling safety and provides quality control benefits associated with our product.”
Source : AIST
Steel furnaces in Pakistan to install dry scrubber by Aug 31
The Nation reported that all the steel furnaces in Pakistan will install dry scrubber by August 31, 2019 while steel rerolling mills will not use black carbon as fuel and will convert their wet scrubbers to dry scrubber by the above mentioned cutoff date. This was decided during a high level meeting held at EPD Complex with Chairman Smog Commission Dr. Pervaiz Hassan in chair here on Tuesday. Steel Melters Association and Steel Rerolling Mills Association participated in the meeting.
Secretary Environment Protection Department Asad Rehman Gillani, Director Nasim ur Rehman Shah, Deputy Director Misbah ul Haq and other concerned officials were also present on the occasion.
Source : The Nation
ArcelorMittal to cut iron ore output at Omarska mines in Bosnia to extend life
Reuters reported that ArcelorMittal will reduce output and cut 300 out of 800 jobs at its iron ore mines in Bosnia. It said “Output will be reduced by a third to 1 million tonnes and the job cuts will be carried out from September. The move was aimed at prolonging the effective life of the Omarska mine by up to 10 years. Without taking these measures, the mine would have to close in 2025.”
It added “ArcelorMittal Zenica will reduce its consumption of iron-ore from Omarska and instead import additional iron ore from outside Bosnia.”
ArcelorMittal operates a steel plant in the central Bosnian town of Zenica which processes iron-ore from its Omarska mines in Prijedor.
Source : Reuters
JSW does not expect a fall in coking coal orders from ArcelorMittal
Reuters reported that European Union’s biggest coking coal producer Polish JSW does not expect coal orders from major client ArcelorMittal to fall following the steelmaker’s decision to halt operations at its blast furnace and steel plant in Krakow. JSW CEO Mr Daniel Ozon told Reuters “We do not expect quantity cuts in coal orders from ArcelorMittal. The coke from ArcelorMittal’s coking plant in Poland will be delivered to other steel plants in Europe. I do not see significant risks in relation to ArcelorMittal’s statement.”
ArcelorMittal Poland said on Monday it plans to temporarily stop production its furnace and steel plant in southern Poland in September, citing rising carbon emission costs and surging power prices.
Mr Ozon added that he saw some signs of slowdown in the automotive sector but, based on talks with JSW’s clients, assumed that sales volumes should rebound next year.
Source : Reuters
IMO 2020 to raise shipping costs for iron ore - Wood Mackenzie
Wood Mackenzie said that the IMO 2020 regulation on shipping fuel oil is set to increase iron ore freight rates. Wood Mac analyst Rohan Kendall said “The introduction of a lower maximum content for sulfur in fuel oil for shipping may lead to higher shipping rates between iron ore producers Brazil, Australia and Indonesia, to the largest importer China. Ships switching to lower sulfur fuels such as diesel, and to LNG from typical bunker fuel oil may raise costs in hauling the commodity, with higher impact on longer voyages from Brazil to Asia. Brazilian iron ore shipments to China will see largest increases, due to distance travelled, potentially rising by over USD 6 per tonne (more than 40%).Freight from Australia and Indonesia to North Asia will increase by between USD 1.7 and USD 2.9.”
The International Maritime Organization's directive to lower the maximum permitted sulfur content in fuel oil for shipping has led analysts to warn of higher costs and difficulties in meeting demand from the specification change due to refinery infrastructure. Implementation of a reduced sulfur cap on fuel oil to 0.5% maximum sulfur from January 2020, from 3.5% sulfur at present, may lead to higher diesel consumption, as refiners stretch to produce sufficient very low sulfur fuel oil.
Source : SP Global
Vale's iron ore production in Q1 of 2019 dips by 28% QoQ
Vale iron ore fines production totaled 72.9 million tonne in Q1 of 2019, 28% and 11% lower than 4Q18 and 1Q18, respectively, mainly as a result of the impacts following the Brumadinho dam rupture and the stronger than usual weather-related seasonality. Vale pellet production totaled 12.2 million tonne in 1Q19, 23% and 5% lower than 4Q18 and 1Q18, respectively, mainly due to stoppages of pellet plants, following the Brumadinho dam rupture, as well as scheduled maintenances carried out in Tubarão and Oman.
Iron ore fines and pellet sales volume was 67.7 million tonne in 1Q19, 30% and 20% lower than in 4Q18 and 1Q18, respectively. The decrease when compared to 4Q18 was a result of the following effects:
(i) The usual weather seasonality (14 million tonne)
(ii) The impact of production stoppages following the Brumadinho dam rupture (7 million tonne)
(iii) New inventory management procedures at Chinese ports, which impacted the timing of sales revenue recognition (6 million tonne)
(iv) Abnormal rains impacting shipments from the Ponta da Madeira port in the Northern System (5 million tonne); which were partially offset by inventory drawdowns from Chinese ports in 1Q19 (3 million tonne).
Regarding the inventory management procedures mentioned above, according to previous practices, once a commercial agreement was reached, ownership of the product at our blending facilities was transferred to the customer and revenue was recognized, irrespective of retrieval of the ore by the customer. Consequently, the ore sold had to be segregated at the port awaiting retrieval, and therefore port operational capacity was constrained due to lack of stockyard flexibility. According to the new commercial practices, ownership of the product and hence revenue recognition is only granted upon cargo retrieval, which affects the timing of sales revenue recognition.
The share of premium products in total sales was 81% in 1Q19, remaining practically in line with 4Q18. Iron ore fines and pellet quality premiums reached USD 10.7 per tonne in 1Q19 vs USD 11.5 per tonne in 4Q18, mainly due to lower market premiums for Carajás fines, which were partially offset by the positive impact of new contract terms for pellets sales.
Production of finished nickel reached 54,800 tonne in 1Q19, 14.4% lower than 4Q18 and 6.5% lower than 1Q18. The decrease was mainly due to lower production from
(i) PTVI, due to the scheduled maintenance shutdown at the Matsusaka refinery, in Japan
(ii) VNC, due to the scheduled maintenance at the Dalian refinery, in China
(iii) Sudbury, due to timing differences in the nickel processing chain.
Copper production reached 93,800 t in 1Q19, 14.6% lower than 4Q18 and in line with 1Q18. Production decreased mainly due to lower feed grades and lower plant throughput at various operations.
Coal production totaled 2.2 Mt in 1Q19, 29% and 9% lower than in 4Q18 and 1Q18, respectively, as a result of extremely severe rains throughout the quarter.
Voor cijfers, zie pdf.
Source : Strategic Research Institute
Die zogenaamde adviseurs die al maanden roeptoeteren hoe ongelooflijk te laag dit aandeel staat genoteerd en dat het koersdoel op € 30,- hoort te staan, zouden die willen gaan solliciteren bij de Efteling, het schijnt dat er in het Sprookjesbos nog volop werk is, "Papier hier, hier papier !", en dan lekker aandeeltjes Arcelor happen, zijn zo direct niets meer waard, wat een puinhoop vandaag. China kan zo direct geen staaldraadje meer kwijt in de VS, dat wordt dus dumpen in de EU, oh ja, bij een Europese Commissie die pas wakker wordt als de eigen industrie al om zeep is, zucht ...
ArcelorMittal announces €530/t offers for north EU HRC
10 May 2019 08:36 (+01:00 GMT)
London, 10 May (Argus) — ArcelorMittal has increased its hot-rolled coil (HRC) offers with immediate effect to €530/t ex-works in northern Europe and €510/t ex-works across the south and east.
This is a huge jump from current spot market pricing against a weak backdrop. Argus' headline northwest Europe HRC index was at €475.50/t ex-works yesterday, down from €535/t ex-works in mid-November. Italian spot market prices are at around €450/t ex-works and lower for bigger tonnages, with the discount relative to northwest Europe HRC at €28/t, according to Argus data.
Lethargic demand and weak order books throughout Europe have prompted ArcelorMittal to take steps to improve the supply and demand balance with a 3mn t/yr supply cut and to reset margins to more sustainable levels in the face of rising costs, both for raw materials and more structural factors such as energy.
Other mills are widely expected to implement some output cuts as well in a bid to bolster European pricing, which is currently nearly the lowest in the world. The immediate risk for ArcelorMittal is that its competitors do not follow suit in terms of prices.
Europe is currently a buyers' market and service centres do not need to take imported supplies, given weak pricing at home and short lead times. But there is also a risk for European mills in that, by the time they have filled their order books and are less aggressive for tonnage, import offers might become more attractive to buyers.
The latest import offer for Turkish supplies into southern Europe was around €450-455/t cfr.
Deal ThyssenKrupp en Tata Steel op losse schroeven
FONDS KOERS VERSCHIL VERSCHIL % BEURS
13,16 1,925 17,13 % Frankfurter Wertpapierbörse (Xetra)
(ABM FN-Dow Jones) De doorgang van de joint venture-plannen van ThyssenKrupp en Tata Steel staat nog maar te bezien nu beide bedrijven verwachten dat de Europese Commissie daar geen goedkeuring voor verleent. Dit meldde ThyssenKrupp vrijdag op basis van inzage in vertrouwelijke informatie.
De twee concerns hebben na een gesprek met vertegenwoordigers van de Europese Commissie de verwachting gekregen dat de combinatie niet doorgaat. De commissie ziet nog altijd bezwaren te veel bezwaren.
Thyssen en Tata stellen dat aanvullende concessies om de commissie over de streep te trekken te nadelig
uitpakken voor de beoogde joint venture.
Voor ThyssenKrupp heeft dit tot gevolg dat de zogeheten Steel Europe Business wordt gereïntegreerd en dat de vooruitzichten voor het boekjaar 2018/2019 worden herzien. Het aangepaste bedrijfsresultaat zal 1,1 miljard tot 1,2 miljard euro bedragen. Bij de jaarcijfers kwam het bedrijf niet verder dan 'meer dan 1 miljard euro' voor deze post.
Op 14 mei publiceert ThyssenKrupp de resultaten over het tweede kwartaal.
Nu de afsplitsing van de staaltak niet doorgaat, overweegt ThyssenKrupp om zijn liftentak naar de beurs brengen. Dit voorstel is ingediend bij de raad van commissarissen.
De koers van het aandeel noteerde vrijdag 17,0 procent hoger.
Door: ABM Financial News.
Redactie: +31(0)20 26 28 999
© Copyright ABM Financial News B.V. All rights reserved.
China to further tighten steel capacity swapping rules - NDRC
Reuters reported that China’s top economic regulator National Development and Reform Commission announced that China will tighten approvals of steel capacity swapping between companies and ban all new steel capacity in any form, in order to streamline the sector. The announcement follows illegal capacity expansions approved by local governments under the cover of capacity swaps, where companies move capacity between different regions to reduce the concentration of plants in polluted industrial areas. The new facilities have undermined Beijing’s efforts to reduction pollution and reduced steel capacity. NDRC said “The central government will carry out inspections on capacity cuts to prevent closed projects from reopening.”
Additionally, China will control steel-making capacity in key pollution-control areas, including the Beijing-Tianjin-Hebei region and the Yangtze River Delta, by imposing more strict environmental, energy, land and water usage standards
The NDRC also said it will encourage mergers and restructuring in the steel, coal and coal-fired power sectors this year, and will eliminate all so-called zombie firms, companies with outdated equipment and debt that are no longer competitive, by forcing them to shut down or merge with other companies by 2020.
China has eliminated more than 150 million tonnes of crude steel capacity in the past three years. There are around 980 million tonnes remaining, nearly half of the world’s total.
Since 2016, China has disposed of more than 1,900 zombie firms and heavily-indebted companies.
Source : Reuters
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