China's steel sector to reach carbon peak by 2025

China’s steel sector has been targeting to reach its carbon emission peak by 2025, or five years ahead of the country’s target for the whole economy, and by 2030, it aims to cut carbon emission further by 30% from 2025, the domestic steel market has been circulating an action plan proposed by the industrial participants.

China’s steel sector, being the country’s second largest carbon emission source or accounting for around 17% of the China’s carbon emission, has been at the centre stage after Beijing’s publicizing its commitment to reach the carbon peak by 2030 and realise carbon neutrality by 2060, Mysteel Global noted.

An action plan for the steel industry in carbon emission has been drafted and will probably be finalized and released by 2021, according to a broadcast by the China National Radio (CNR) on March 20 on the 12th China Iron and Steel Development Forum in Beijing, and to realize the 2025 and 2030 missions, the country’s steel industry will have to curtail its steel capacity and the annual steel output, according to a sharing via CNR’s WeChat account.

“This is hardly surprising, though I have no idea whether the 2025 is already a done deal, as it has been a common practice for Beijing to plan ahead and to accomplish a mission ahead of the schedule to avoid the last-minute rush,” a Beijing-based steel analyst said.

Over 2016-2020, China had eliminated over 200 million tonnes/year of outdated and excessive ironmaking and steelmaking capacity, and 140 million t/y of induction-furnace capacity, but the country is still facing excess steel capacity, the speakers at the forum were quoted saying so.

China has already worked towards the capacity cuts via more stringent “capacity swap” guidelines for 2021 the old-for-new capacity ratio for blast furnaces (BFs) has been raised to 1.5:1 from the 1.25:1 over 2018-2020, while the ratio for replacing BFs with electric arc furnaces (EAFs) has been at 0.75:1, as EAFs, utilizing steel scrap, are much eco-friendlier, as reported.

Steel mills in China will also be evaluated in the aspects of carbon emission, pollutant emission and energy consumption to better monitor its environmental protection efforts, according to a report by China’s state-owned Xinhua News Agency on the forum.

Luo Tiejun, vice chairman of China Iron & Steel Association, reiterated that cutting down on iron and steel output will be the way to go to reduce carbon emission, as “70% of carbon emission in the steel industry is from sintering and blast furnaces,” he was quoted saying so by CNR.

A second Beijing-based industrial source agreed.

“At the end of the day, blast-furnace steelmaking will consume coke and coal, and there is only so much you can do in technological upgrading in reducing but not eliminating coal or coke consumption, and the final solution, thus, lies in replacing blast furnaces,” he said.

For 2021, Beijing already pledged to cut its national crude steel output on a few occasions though omitting mentioning the exact cut, as reported, and the recent intensified curbing on the steel operations in Tangshan has been viewed by some of the Chinese market sources as the moves toward the annual steel output reduction goal.

For 2020, China produced 1.065 billion tonnes of crude steel, or up 7% on year, which should not be surging further for 2021 for the country’s image or environmental protection, some of the Chinese market sources commented.

To fill up any gap in supply on the anticipated robust demand for steel, Luo proposed that the country should be “maintaining higher value-added steel exports, while cutting down on commercial-grade products and banning low value-added products, and at the same time, increasing the imports of preliminary products such as steel scrap and semi-finished steel”, according to CNR’s post.

This has been in line with the proposals by many steel market sources and associations since late January when the country’s Ministry of Industry and Information Technology announced the initiative to reduce the country’s steel output, as reported.

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.