CRU: China's Updated 'Guide' Reiterates Quality Over Quantity as Key Steel Industry Focus

LONDON, Dec. 14, 2018 /PRNewswire/ --

China's Ministry of Industry and Information Technology recently released an updated "Industry Transformation Guide" (The Guide). This document is one of a type the Government releases from time to time in order to restate or extend a policy position, and publicly set expectations for the broad policy framework it expects industry to operate within. Therefore, it is different from policy documents which are more explicit on stricter implementation criteria, such as the winter heating season cutback policy.

The Guide also reiterates the Government's determination that the domestic steel industry is to focus on quality over quantity, which means that the industry should prioritise value-added steel production while keeping any new ironmaking and steelmaking capacity additions under control. The 200-page document includes recommendations detailed at a provincial level to maximise geographical advantages. For the steel industry, it therefore sets out product-wise provincial principles and draws a blue print which focuses heavy-end production away from environmental sensitive areas like Beijing, Tianjin and Hebei, to geographically advantageous regions as a very important step in overall industry transformation.

It is important to know that The Guide does not change any existing policy measures but serves to reinforce or augment them. An example is capacity elimination policy and the capacity swap within that which we previously analysed. Moreover, The Guide extends further with instructions and suggestions at provincial level to facilitate existing capacity elimination and capacity swap policy implementation.

Quality over quantity - The Guide in brief
In summary, The Guide sets forth China's broad approach to industrial development strategy by setting national guidelines and regional targets while sticking to the principle of efficient market resource allocation with government instructions. Specifically, the document reiterates the focus on quality over quantity in the steel sector, which means that domestic steel should prioritise value-added and high-quality production while keeping any new ironmaking and steelmaking capacity additions in strict control.

Read the full story: https://www.crugroup.com/knowledge-and-insights/insights/2018/china-s-updated-guide-reiterates-quality-over-quantity-as-key-steel-industry-focus/

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