Update on China s s Structural Adjustment

Transcription

1 IMnI Board Meeting in Monte Carlo Update on s s Structural Adjustment November, 2 Nippon Denko Co., Ltd. Keigo Takahashi s s GDP and its Growth (RMB1,,) 16, 1 14, 12, 1, 89,468 97,3, , , , 67, , , 8. 2, GDP Growth (1-6) 7 Fig 1

2 , Regional and Chinese Crude Steel Production (mil ton) 1,2 1, ,1 1, estimate (2.2) (23.) (2.9) (3.9) (14.9) (17.7) Asia EU CIS North America South America Africa Others (Source: IISI) Fig 2 and Chinese Ferro-alloys Production (1MT) 3, 2, 2,, 1,, 19,166 19,389 18, , , ,893 22, ,374 2, 24, estimate 8,6 9, (Sources: IMnI, ICDA, USGS, Steel Yearbook) Fig 3

3 and Chinese Manganese Alloys Production (1MT) 12, 1, 8, 6, 4, 2, 8, estimate 9,13 8,27 7,76 2,22 2,423 2,69 1,779 1,6 4,242 4,6 3, (Sources: IMnI, Steel Yearbook) Fig 4 and Chinese Manganese Alloys Trade (1MT) 6, 2, 4, 3, 3, , , ,99.7 4, , 1, , (1-6) (Source: IMnI) Fig

4 and Chinese Manganese Ores Trade (1MT) 14, 12, 1, 8, 6, 4, 2, 7, ,22 9,98 7,9 7,31 2,867 1,711 2,8 13, ,714 4,66 2, (1-6) (Source:IMnI) Fig 6 Structural Adjustment of s s Ferro-alloy Industry-1999 Since the latter half of the 199 s, the financial position of s ferroalloys industry had sharply worsened due to an excessive number of producers, excessive production capacity and excessive competition. In view of these circumstances, the Central Government announced a structural adjustment policy in Elimination of small-scale scale facilities Eliminate electric furnaces of less than 3,2kVA and blast furnaces of less than 1M3 2. Suspension of new operations Suspend the construction of new plants for years beginning from Environmental protection measures Regulate the emission standards of soot and smoke and shut down facilities that do not comply with the standards 4. Promotion of technological innovation. Reduction in the number of producers but expansion through integration in the size and scale of the remaining companies Fig 7

5 Structural Adjustment of s s Ferro-alloy Industry-24 In 21, s s economy turned around and crude steel production sharply increased. Overlapping investment again appeared before the structural adjustment policy functioned effectively. As a result, ferroalloys oys production expanded without sufficient measures being taken to address electricity supply shortages and environmental protection. In order to cope with the problems, the National Development and Reform Committee (NDRC, organized in 23) announced a structural adjustment policy anew in May, 24 and strengthened its macro-control control policy. 1. Disposal of small-scale scale facilities Dispose electric furnaces of less than 3,2kVA, blast furnaces of less than 1M3. Close electric furnaces with a capacity of less than,kva by the end of 2 2. Compliance with environmental protection standards 3. Control on bank loans to facilities 4. Withdrawal of preferential treatment provided by local governments for electricity fees, taxes, land use, etc.. Imposition of additional electricity fees for electric furnaces constructed after 1999 Fig 8 Structural Adjustment of s s Ferro-alloy Industry-2 On July, 2, the NRDC issued a circular on deepening the regulatory work in the ferro-alloys industry to promote structural upgrading, taking the position that measures for the effective use of energy/resources and environmental protection should be strictly enforced. Establish precise admission conditions for the ferro-alloys industry applicable for all new as well as existing companies As the first phase, publish a list of approved companies by December, 2 All existing companies are to be checked by the end of June, 26 To be checked and approved; 1.Technical methods and equipment 2.Environmental protection measures 3.Energy consumption 4. Resource consumption. The safety of production facilities Companies judged not to be compliant are required to comply with regulations within a limited time period (at most one year). If they do not comply, bank loans will be stopped and the supply of electricity will be cut off, resulting in their forced withdrawal from the ferroalloy business. Fig 9

6 Eliminating Preferential Treatment for the Ferro-alloys Industry 1. Abolishment of export tax rebate Refund of value-added tax on all exported ferroalloys was abolished in January, 2 2. Cancellation of tax benefits for toll trading The regulation was enforced in August, 2 Value-added tax on imported ore and export tax on exported products shallbe imposed though they used to be exempted. 3. Review of export tax The currently applicable export tax is forecast to increase Fig 1 Steel Development Policy & the Ferro-alloys Industry The National Development and Reform Commission (NDRC) issued a new steel development policy on July 8, 2, laying out a plan for the industry over the next years. 1.Increase production concentration ratio of steel industry by consolidating/grouping together steel producers 2.Build recycling-oriented steelmaking plants by recycling resources, effectively using waste heat, retaining heat, etc. 3.Construct large-scale integrated steelmaking plants in coastal areas 4. Limit exports of highly energy-consuming and heavily polluting products including ferroalloys In view of the need for effective use of energy/resources and environmental protection, the ferroalloys industry shall be required to promote a reasonable size of production giving priority consideration to domestic demand Fig 11