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Inner Mongolia's capacity phase-out unlikely to hamper ferroalloy output: sources www.spglobal.com
The Inner Mongolia government's decision to eliminate ferroalloy capacity in the region is expected to have limited impact on China's total ferrosilicon production, as new or replaced capacity will likely fill the production gap, industry sources told S&P Global Platts Feb. 23.
Inner Mongolia -- a major coal-mining area in northern China -- said it has implemented a plan requiring its ferroalloy industry to phase out submerged arc furnace with power consumption capacity of 25,000 kilovolt-ampere (kVA) and below before the end of 2022, according to an energy-saving plan released in the week to Feb. 18.
Further, the industry will remove 3.14 million mt of ferroalloy capacity during 2021-2022, the plan showed. The plan marks development policies covering China's 14th five-year period (2021-2025).
Given the slew of replacement projects released by the local government so far, there is not a huge time lag between eliminating "backward capacity" and commissioning of new capacity, sources said.
Inner Mongolia will strictly control any new capacity installation by energy-intensive industries, including steel, ferroalloy, and aluminum during 2021-2025, the plan showed.
Closed-type submerged arc furnace should be used for new or expanded silicomanganese alloy, high-carbon ferromanganese and high-carbon ferrochrome projects, with power consumption capacity higher than 30,000 kVA, according to the plan.
Capacity replacement and reduction in energy consumption should be implemented within the region if it is necessary to build new capacity, with the capacity replacement ratio set to 1.25:1, the Inner Mongolia government said late 2021. The region's overall ferroalloy production capacity has been capped at around 14 million mt/year during 2021-2025.
It remains unclear when the replacement ferrosilicon capacity would come onstream, sources said, adding that "backward capacity" production is expected to continue until the end of 2022 in view of healthy profit margins in the industry.
In addition to the ferrosilicon plans, the region is looking to wash out pig iron furnace for steelmaking with effective volume below 1200 m3, converter with nominal capacity of 100 mt and electric arc furnace with nominal capacity of 100 mt (50 mt for alloy steel) before the end of 2023, according to the plan. The region will eliminate ironmaking capacity of 6.65 million mt/year and steelmaking capacity of 6.2 million mt/year in 2021-2023.
Published Date:2022-02-24
