LONDON, April 3, 2019 /PRNewswire/ -- The Chinese steel value chain suffered great losses in late-2015 due to structural over-capacity. The government has since conducted a 'supply-side' reform by eliminating outdated and inefficient industrial capacity, including coke ovens.
Since China has entered a development stage with slowing steel demand growth and with increasing scrap supply reducing the need for hot metal, the coke sector will continue to be subject to capacity consolidation and rationalisation for environmental protection purposes. In addition to capacity reductions, the coke industry will also be 'greener' in the coming decade through the replacement of inefficient, small coke ovens by larger and cleaner ovens.
The government will keep cracking down on pollution
The 13th National People's Congress (NPC) began its annual two-week meeting on 05 March. During what was arguably most important policy meeting, the Chinese government said it would maintain the good results achieved in environmental protection over the last two years. This means that polluting industries, including coke operations, will be discouraged in coming years.
CRU has identified that coke making is, in theory, the second largest emission source at an integrated steel mill. The 0.27 kg/tonne of crude steel of PM emission is only second to that of the steelshop and accounts for ~28% of total PM emissions from the integrated steel mill. Given this, coke oven operations have been more closely watched and restricted by the government in 2018. In fact, hot metal capacity restrictions have been relaxed for most of the 2018/2019 WHS, but restrictions on coke operations have been stricter, largely in response to high pollution levels. Although air quality improvements were not as significant as those in the 2017/2018 WHS, when overall capacity restrictions were more aggressive, it still improved significantly compared with badly polluted years prior to 2017. Controlling coke capacity is much easier and less costly than restricting BF operations and can achieve results acceptable to the government.
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