//Timeline: China’s crackdown on induction furnace steel

Timeline: China’s crackdown on induction furnace steel

China’s clampdown on induction furnace steel has gathered pace, after it was singled out as a cornerstone of this year’s supply-side structural reforms. The following timeline traces key policy articulations made on them:

December 1, 2016

The government of Jiangsu province in eastern China dispatches inspection teams to unroot sub-standard rebar production, and the chief culprits were
identified were induction furnace operators. They were ordered to dismantle.

Following Jiangsu’s lead, provinces Shandong in the east and Sichuan in the southwest also launched probes into induction furnaces, local media reported.

ALSO READ: Will China’s induction furnace steel whac-a-mole finally come to an end?

December 6, 2016

The blitz against induction furnaces spreads to Hebei province, China’s home of steel. The Tangshan city government issued an emergency notice conveying provincial authorities’ orders to follow Jiangsu’s campaign to thoroughly investigate induction furnaces. Once discovered, the illegal
facilities must be dismantled immediately upon receipt of the emergency notice.

January 10, 2017

CISA chairman, Ma Guoqiang, provided the first hint of policy direction in the new year, when he said the central government has set date for the
complete eradication of induction furnaces as June 30, as the cornerstone of its supply-side reforms.

Futures for rebar and iron ore that day topped their daily trading limits of 7% and 8%, respectively, while coking coal and coke futures surged 8.98%
and 7.82%, respectively.

January 13, 2017

In an update to regulations governing entry into the iron and steel scrap processing industry, the Ministry for Industry prohibits the sale of scrap to induction furnace operators, starving them of their main raw material.

January 19, 2017

Beijing orders provincial governments to conduct a dragnet of unlawful steel and coal companies, whose identities are to be submitted in lists to
central government agencies. The inspections will track down companies that have unlawfully set up new capacities, produced and sold induction furnace billet, and restarted closed capacity.

February 8, 2017

Jiangsu province claims victory as induction furnace operator Hongtai Steel was made to seal 10 furnaces with capacity of 2 million mt/year, and
would dismantle them by the end of February. Hongtai promised never to resume operating them.

February 15, 2017

The National Development and Reform Commission and four other top government agencies reiterate the importance of cracking down on excess
capacity and induction furnaces churning out low-quality steel. Reminder on the June 30 deadline was served.

Banks are forbidden from issuing loans to the targeted companies, and are told instead to support steelmakers conforming to capacity cuts and environmental regulations.

February 23, 2017

CISA publishes a highly restrictive whitelist of permissible uses of induction furnaces, including in casting, making high-quality steel and ferroalloys with specific properties, and in stainless and high-alloy steelmaking.

March 5, 2017

Premier Li Keqiang said the steel capacity elimination target for 2017 has been set at 50 million mt/year, and reiterated his government’s tough stance against producers and sellers of induction furnace steel.

With analysis by Zhang Jing

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