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Chinese steel capacity reduction: focus shifts from closures to swaps

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Report summary

By 2017, China announced the closure of 115 Mt of steel capacity including some 15 Mt net reduced via the country's steel capacity swap scheme. Under the scheme, in 2017 China approved the replacing of 106 Mt and 132 Mt of outdated hot metal and steel capacity with 94 Mt and 117 Mt of new capacities respectively. The majority of the swaps will take place between 2018 and 2024, causing no acute market tightness for 2018. However the structural shifts of integrated steel capacity from inland areas to the coast, and the replacing of small blast furnaces with larger ones suggest positive demand for seaborne and high quality iron ore and metallurgical coal in the medium term.

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    China Hot Metal Capacity Swaps.xlsx (1)

    XLSX 54.81 KB

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    Chinese steel capacity reduction: focus shifts from closures to swaps

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Table of contents

  • Steel capacity swaps - BOF process remains dominant
  • EAF gains are not systemic. For now.
  • Hot metal capacity – furnaces get larger and move to the coast
  • stimulating demand for seaborne iron ore
  • High-grade iron ore and met coal will be the winners

Tables and charts

This report includes 5 images and tables including:

Images

  • Chart: Announced Chinese steel capacity reduction (plan), (Mt)
  • Chart: Announced Chinese steel capacity swap (plans) by process approved in 2017 (Mt)
  • Chart: Announced Chinese hot metal and steel capacity swap (plans) approved in 2017 (Mt)
  • Map: Relocation of inland steel mills to the coast
  • Chart: Announced Chinese swapped blast furnaces by size during 2017-2024 (Unit)

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