Li Keqiang promises ‘relentless’ scrap-fed steel crackdown
The most-active iron ore contract on the Dalian Commodity Exchange rose by 8pc today, while the most-active rebar contract gained by 4.7pc.
Li's statement supported market sentiment, as a continued crackdown on scrap-fed steel capacity will tighten supply of rebar and wire rod. Scrap-fed mills exclusively produce long products, which have experienced strong demand from China's robust real estate and construction markets.
Beijing will remain on guard against any attempts to resurrect induction furnace-based capacity, Li said. Companies that try to evade the crackdown will be hit with severe punishments, while the government authorities responsible for oversight will be held accountable, he said.
China claims to have eliminated 120mn t/yr of induction furnace-based, scrap-fed steelmaking capacity as of 30 June. These mills produced sub-standard products and emitted more pollution than blast furnace-based mills.
Li's statement came after inspections overseen by the powerful state council found two companies in Tianjin province and one in Hunan were producing scrap-fed steel, despite the ban on such production.