The People’s Bank of China (PBOC) released a report on China’s Monetary Policy implementation in the third quarter of 2021, according to the pboc website. According to the report, direct financing support should be increased to promote green transformation and low-carbon development of steel enterprises.
The central bank pointed out that the steel industry accounts for about 15 percent of the country’s total carbon emissions, making it the biggest carbon emitter in the manufacturing sector and an important sector in promoting low-carbon transformation under the “30·60″ target. During the 13th Five-Year Plan period, the steel industry has made great efforts to promote supply-side structural reform, continue to reduce excess capacity, and promote innovative development and green development. Since 2021, driven by factors such as sustained economic recovery and strong market demand, the operating revenue and profits of the steel industry have grown significantly.
According to the Statistics of the Iron and Steel Association, from January to September, the operating revenue of large and medium-sized iron and steel enterprises increased by 42.5% year-on-year, and the profit increased by 1.23 times year-on-year. At the same time, the low-carbon transformation of the steel industry has made steady progress. As of July, a total of 237 steel enterprises nationwide had completed or were implementing ultra-low emission transformation of about 650 million tons of crude steel production capacity, accounting for about 61 percent of the country’s crude steel production capacity. From January to September, sulfur dioxide, smoke and dust emissions from large and medium-sized steel enterprises decreased by 18.7 percent, 19.2 percent and 7.5 percent year-on-year, respectively.
The steel industry still faces many challenges during the 14th Five-Year Plan period, the central bank said. First, the price of raw materials continues to be high. Since 2020, the prices of coking coal, coke and scrap steel, which are needed for steel production, have risen sharply, pushing up production costs for enterprises and posing challenges to the safety of the steel industry’s supply chain. Second, capacity release pressure rises. Under the policy stimulus of stable growth and investment, local investment in steel is relatively enthusiastic, and some provinces and cities have further expanded steel capacity through relocation of urban steel mills and capacity replacement, resulting in the risk of overcapacity. In addition, low-carbon transformation costs are high. The steel industry will soon be included in the national carbon emission trading market, and carbon emissions will be limited by quotas, which puts forward higher requirements for the low-carbon transformation of enterprises. Ultra-low emission transformation requires a large amount of investment in the structure of raw materials, production processes, technical equipment, green products and the connection of upstream and downstream industries, which poses challenges to enterprises’ production and operation.
The next step is to accelerate the transformation, upgrading and high-quality development of the steel industry, the central bank said.
First, China is highly dependent on iron ore imports. It is necessary to establish a diversified, multi-channel and multi-way stable and reliable resource guarantee system to improve the steel industry chain level and risk resistance ability.
Second, steadily promote the layout optimization and structural adjustment of the iron and steel industry, ensure the withdrawal of capacity reduction, and strengthen the guidance of expectations, to avoid large market fluctuations.
Third, give full play to the role of the capital market in the technological transformation, energy conservation and environmental protection, intelligent manufacturing, mergers and reorganizations of steel enterprises, increase the support of direct financing, and promote the green transformation and low-carbon development of steel enterprises.
Post time: Dec-01-2021