Small steel mills may be closed
China's Ministry of Industry and Information Technology (MIIT) yesterday released further regulations on steel producers' energy consumption, production capacity and environmental protection after urging commercial banks to suspend issuing credit to steel mills that were blindly expanding.
China plans to step up consolidation of its steel sector this year by closing small mills and improving production standards, the ministry said on July 12.
The ministry requires that the steel mills' waste water discharge should be no more than 2 cubic meters for every ton of steel produced, while dust and sulfur dioxide discharge should be within 1 kilograms per ton and 1.8 kilograms per ton, respectively.
The regulation also pledged to eliminate mills that produced less than 1 million tons of crude steel last year.
Zhou Xizeng, a steel industry analyst with the CITIC Securities, pointed out that most of China's small and medium-sized steel producers are unable to meet the capacity requirement, while 70 larger steel mills contribute 80 percent of China's steel production.
"This indicates that lots of small steel mills will be shut down," he said.
Regulations on financing and land use will also be tweaked in order to encourage further consolidation in the sector, and mills will also be encouraged to travel wider in their search for takeover targets.
The ministry said last month that China would put 60 percent of its total steel capacity in the hands of its 10 biggest steel producers by 2015.
