Fighting steel overcapacity and decarbonization

Nakano observes that, taken together, the two sets of Chinese state measures “form a complementary system that links the upstream and downstream processes of the steel industry.”

She also adds that “while no official document or statement appears to indicate whether or how these two elements were intended to interact, they appear to have created a circular economy framework that addresses both overcapacity and decarbonization.”

Nakano adds: “Upstream, the take-back program aims to ensure the availability of scrap metal from recycled and dismantled vehicles and other consumer goods.

“This helps increase the supply of scrap metal, which is essential for the transition to EAF steel production. As scrap supply increases, the steel industry can increase its EAF capacity, allowing it to phase out carbon-intensive blast furnaces.

She continues: “Downstream, the recovery program can boost demand for steel products through large-scale equipment upgrades and trade in consumer goods. »

Nakano also notes that by creating new demand for steel – particularly in green sectors such as electric vehicles – the program “can create an outlet for surplus.”

“This stimulation of demand, combined with stricter capacity regulation and production management induced by the Special Action Plan,” she says, “creates opportunities for more energy-efficient steel production. resources and lower carbon content.
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