[SMM Survey] The New Blast Furnace Capacity in 2024 Falls Far Short of the Exit Volume, Leading to a Decline in Ironmaking Capacity

In 2024, capacity replacement in the steel industry is expected to continue. According to the SMM survey, by the end of the year, a total of 22 new blast furnaces will have been commissioned nationwide, with a total pig iron capacity reaching 33.31 million mt. Most of the newly commissioned blast furnaces are concentrated in the range of 1,200 m³ to 2,000 m³, with a few exceeding 3,000 m³. These blast furnaces are primarily located in north and east China, with relatively fewer in other regions. Meanwhile, the number of blast furnaces exiting the market has increased compared to previous years, totaling approximately 42 units, with a combined pig iron capacity of 34.71 million mt. Most of these exiting blast furnaces are small-scale units with a volume below 1,000 m³. The specific details are as follows: According to monthly data, the commissioning of blast furnaces this year has been concentrated in the middle and end of the year, with July seeing a particularly significant increase in capacity. Most blast furnaces exited the market simultaneously with the commissioning of new ones, while some ceased operations earlier. Delayed exits have been relatively rare this year. Data source: SMM On August 20, 2024, the General Office of the Ministry of Industry and Information Technology issued a notice regarding the suspension of steel capacity replacement work. Starting from August 23, 2024, all regions are required to suspend the public disclosure and announcement of new steel capacity replacement plans. Any actions that continue to disclose or announce steel capacity replacement plans in violation of this notice will be considered unauthorized capacity additions and will be publicly criticized as negative examples. This notice has, to some extent, slowed the progress of certain capacity replacement projects. Considering the current severe overcapacity in the steel industry and the continued decline in downstream demand, which has led to thin steel mill profits, some steel mills have also suspended their capacity replacement plans. The most direct result is that new blast furnace projects originally scheduled for construction in the next two years have been postponed or delayed. According to SMM's tracking of blast furnace commissioning plans, 18 new blast furnaces are still expected to be commissioned in 2025, with a total pig iron capacity of 26.06 million mt. Most of these blast furnaces will have a volume in the range of 1,200-3,000 m³ and will primarily be constructed in central, north, and south-west China. At the same time, 22 blast furnaces are also expected to exit or be decommissioned in 2025, with a total pig iron capacity of 16.41 million mt. The exiting blast furnaces will similarly be concentrated in volumes below 1,000 m³. The specific details are as follows: Data source: SMM In recent years, the trend of blast furnace capacity replacement has shown a significant decline in the number of newly commissioned blast furnaces since 2022, with a noticeable narrowing of capacity gaps. This change is mainly driven by the continued decline in market demand. Currently, the steel industry faces a severe overcapacity issue, compounded by the suspension of the capacity replacement policy by the government. Considering these factors, some ongoing projects are expected to be commissioned in 2025, and the number of new blast furnaces commissioned in the future may further decrease. SMM will continue to monitor and update the actual commissioning capacity data for blast furnaces in China in 2025. Data source: SMM Click here to view the SMM Metal Industry Chain Database

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[SMM Survey] The New Blast Furnace Capacity in 2024 Falls Far Short of the Exit Volume, Leading to a Decline in Ironmaking Capacity

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