China’s Ministry of Industry and Information Technology, the National Development and Reform Commission, and the Ministry of Ecology and Environment jointly issued a “Guidance on Promoting High-quality Development of The Steel Industry” agenda. A number of steel industry development goals and timetables have changed, including a delay in carbon emissions peaking and carbon neutrality being achieved.

Peak carbon is now planned to be reached by 2030, compared to 2025 in the earlier draft document, Kallanish notes. The move could imply slower investment in equipment upgrades in the coming years, which could in turn impact corporate costs and steel prices. The target was already one of the easier goals to accomplish, however, considering that output was expected to decline and a greater proportion was expected to be produced by electric arc furnaces.

The easing of the target does signal less pressure to conduct short-term environmental controls, however, which the central government increasingly views as counterproductive and disruptive to the wider economy.

Promoting mergers and acquisitions to increase industry concentration remains one of the focuses. For this purpose, the new document lifts requirements for mergers to take place within provinces and allows mergers across different types of ownership structure. This favours national champions, such as Baowu Group, over provincial players.

The targets for the concentration ratio of the top five and top ten companies to reach 40% and 60% respectively by 2025 have been withdrawn. However, the document still signals that the industry will increasingly concentrate around a small number of super-large steelmaking groups (see Kallanish 8 February).

In terms of raw materials, annual steel scrap consumption is expected to reach over 300 million tonnes by 2025. This is however lower than the 320mt set in the draft version. The goal of overseas equity iron ore accounting for 20% of imported ore is also no longer mentioned. Pig iron, direct reduced iron, scrap, billet and ingot imports will be encouraged.