6 Aug 2010 11:47

China's steel industry must focus on logistics system improvements - official

Qingdao. August 6. INTERFAX-CHINA - China's steel industry needs to focus attention on building an advanced logistics in addition to the elimination of outdated production facilities, Deputy Director Xiao Chunquan of China's Ministry of Industry and Information Technology's (MIIT) Performance Inspection and Coordination Bureau said at an August 5 conference in Qingdao, Shandong Province.

According to a previous Interfax report, the MIIT released guidelines in mid July of this year stipulating the upgrading or decommissioning of smaller, outdated production facilities - changes that could place an added burden on the industry's logistics chain.

"For mills that use large-sized blast furnaces, the large product output volume pushes up logistics costs, and there are few advantages in terms of energy consumption," Xiao at the 2010 Ferroalloy Market Seminar.

He added that as many steel mills begin to build large-sized furnaces to adhere to the MIIT guidelines, problems associated with overcapacity will worsen, placing added pressure on logistics.

"I feel that the industry should instead eliminate steel mills whose logistics systems cannot support production," Xiao added.

Mysteel Information's Vice President Jia Liangqun told Interfax that China's steel mills transport imported iron ore on water, pushing production costs up for China's inland steel mills.

An employee with Tianjin-based Rockcheck Steel Group Co. Ltd., who spoke with Interfax on the condition of anonymity, explained that mills save more on freight rates when transporting larger loads, so there is no need to improve the current logistics system.