China is planning to cut 80Mmt of steel capacity and cap the number of steel companies in an effort to tackle the glut that has been plaguing its steel industry for many years.
An action plan will be introduced before June 2015 and most of the expected capacity cuts will focus on Beijing, Tianjin and Hebei. The latter intends to cut capacity by 60mt, it is claimed.
Environmental laws will be strengthened and outdated capacity eliminated.
The Chinese Government will initiate a three-pronged plan revolving around capacity cuts, intelligent manufacturing and the country’s ‘belt and road’ initiatives.
Where intelligent manufacturing is concerned, the plan is to develop two to three intelligent demonstration factories, according to Luo Tiejun, an official of China’s Ministry of Industry and Information Technology (MIIT). The plan is to embrace intelligent and automatic process control, develop e-commerce systems and integrate IT and industrial processes.
The Belt and Road initiatives are basically designed to enhance regional connectivity with the rest of the world and are based around establishing routes through Asia, Europe and Africa and connecting the economic regions of Europe with Asia.
Most of the countries in the regions along the planned routes have little in the way of steel capacity and already import what they need. The Belt and Road initiative will require major infrastructure investment and this, the Chinese believe, will create markets for its domestic producers who have plenty of steel to export. It is estimated that the initiative will generate demand for 18Mt of building materials in the six nations bordering the Xinjiang Uygur Autonomous Region.
Where e-commerce is concerned, the process has been ongoing since 2000 when the first steel information website, Mysteel.com, was set up. Since then more than 580 commodity information websites have been set up of which 170 are steel e-commerce sites.
Many Chinese steel companies have developed e-commerce platforms. Baosteel offers bsteel.com, Hunan Valin Iron & Steel has set up holdsteel.com and both have turned losses into profits. Minmetals Development Co’s e-commerce platform has boosted transaction volumes for the company by over 2.7Mt.
A three-year plan from China’s Ministry of Industry and Information Technology is expected in June.
Source: China Metals.