China’s ‘special action plan for carbon reduction’ likely to shrink demand for traditional steelmaking raw materials

A “special action plan for carbon reduction” unveiled by China's National Development & Reform Commission (NDRC) will reduce the need for coking coal and iron ore by focusing on upgrading existing equipment and the switch to electric-arc furnaces, sources told Fastmarkets this week

On Friday June 7, the NDRC and related departments unveiled the plan, which sets out some specific targets for energy conservation and carbon reduction in the steel industry by the end of 2030.

The action plan sets several major targets of the steel industry:

  • By the end of 2025, the energy consumption per tonne of product produced using blast furnace and converter processes in the iron and steel industry will be reduced by more than 1% respectively compared with 2023.
  • By the end of 2025, the energy consumption used to produce 1 tonne of steel will be reduced by more than 2% compared with 2023 and the use of self-generated waste heat and pressure will be increased by at least 3% compared with 2023.
  • From 2024 to 2025, the steel industry will reduce its standard coal use by about 20 million tonnes and carbon dioxide emissions will be reduced by about 5,300 tonnes.
  • By the end of 2030, the energy efficiency of major processes in the iron and steel industry will be further improved.

To achieve those targets, the NDRC and related departments will encourage the steel industry to increase the proportion of short-process electric-arc furnace steelmaking and accelerate the upgrading of energy-intensive equipment.

Market participants said there was unlikely to be much visible impact in 2024, but the action plan will ultimately have a negative impact on demand for Chinese raw materials such as iron ore and coking coal in the longer term.

“It will be hard to see the impact on coking coal in the short term, [but] demand for coking coal is highly likely to shrink [in the longer term],” a trader source in Northern China said.

Another trader source in the north, based in Shanxi province, said there would be negative effect on demand for steelmaking raw materials such as iron ore and coking coal.

“Because the crude steel volumes produced by EAFs will replace some volumes [currently] produced by blast furnaces – based on the guidance in the [NDRC action] plan – demand for iron ore and coking coal will be [reduced],” the source said.

Sam Li Xiaoyu in Shanghai contributed to this report.

Discover how our suite of green steel prices can support your ‘green’ investment decisions while bringing transparency to the industry. Talk to our experts today.

Follow the low-carbon steel discussion and keep up-to-date with the developments influencing the decarbonization of the steel industry

What to read next
Fastmarkets’ pricing database has been updated. The steel billet index export, fob Black Sea, CIS price was published at $496 per tonne on July 19. This price is part of the Fastmarkets steel price package. For more information or to provide feedback on the delayed publication of this price or if you would like to provide price […]
Fastmarkets proposes to discontinue its weekly price assessment for steel reinforcing bar (rebar) domestic, ex-whs Northern China.
Fastmarkets launches MB-STE-0918 Electrical steel, non-grain oriented, ex-whs Eastern China, $/tonne and MB-STE-0919 Electrical steel, non-grain oriented, cfr India, $/tonne on July 19.
The publication of Fastmarkets’ CIS steel slab, wire rod, hot-rolled and cold-rolled coil assessments was postponed by one day due to a public holiday in Ukraine on Monday July 15.
US steel producers, pipe and tube manufacturers, trade organizations and union workers gathered at Capitol Hill in Washington DC to meet with lawmakers on Wednesday July 10, urging action on legislation aimed at bolstering US trade remedy laws to curb “unfair trade practices.”
The US government will impose tariffs on steel and aluminium shipped from Mexico that were made elsewhere, in a bid to curb trans-shipment and excess production, the White House said in a statement on Wednesday July 10, a move widely applauded by the pair of metals industries