Steel emission standard may rise to cut capacity
Author:Network sources Source:Network sources Date:2013-04-28

The government and a steel industry association are considering stricter environmental policies in a bid to weed out unqualified players as severe overcapacity remains an urgent issue for the sector, officials from the industry association said Saturday.

The association is now working with the Ministry of Environmental Protection on raising environmental standards for the sector, Zhu Jimin, vice chairman at China Iron and Steel Association (CISA), told the Global Times on the sidelines of a Saturday press conference.

"Unqualified steelmakers will be forbidden from getting an emission certificate, and they will have to halt production without the certificate," said Zhu, adding that the government is expected to finish the process of issuing the certificates by the end of 2013.

China's steel industry, the world's largest, is currently facing many problems. In 2012, China consumed over 700 million tons of crude steel, but production capacity topped 1 billion tons.

Due to the severe overcapacity, companies in the sector are suffering from poor profit margins. Data from CISA showed Saturday that 34.9 percent of China's large and medium-sized steel mills suffered losses in the first quarter.

But at the same time, average daily production in the first quarter reached a historic high of 2.13 million tons and total inventory at large and medium-sized steel mills also reached an elevated level of 14.83 million tons, up 47.4 percent compared with the beginning of this year, CISA said.

Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute, said that tougher environmental measures and technological requirements will phase out excessive capacity in the sector and also help to level the playing field.

"Environmental costs for steelmakers who qualify for the certificate can be as high as 157 yuan per ton," said Li. But for smaller competitors, the cost is less than 100 yuan per ton.

The Ministry of Industry and Information Technology has released one series of regulations already, in 2012, to address the problems in the steel sector. Zhang Lin, an industry analyst at Beijing Lange Steel Information Research Center, said she is skeptical about the effect of such administrative measures in reducing overcapacity in the sector.

"It is hard to implement these measures, as there are over 1,000 steel mills throughout China. And another thing is some steel mills may only cut pollution temporarily in order to get the certificate, and then they will continue to pollute when they are considered qualified," said Zhang.


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