Resources Policy 51 (2017) 272–282

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Resources Policy
journal homepage: www.elsevier.com/locate/resourpol

Implications from substance flow analysis, supply chain and supplier’ risk MARK
evaluation in iron and steel industry in Mainland China
⁎
Jian Liua,b, Rui Anc, , Rongge Xiaoa, Yongwei Yanga, Gaoshang Wangb, Qian Wanga,d
a
School of Earth Sciences and Resources, China University of Geosciences, Beijing, China
b
Institute of Mineral Resources, Chinese Academy of Geological Sciences, China
c
College of Earth Sciences, Jilin University, China
d
Geophysical Exploration Academy of China Metallurgical Geology Bureau, China

A R T I C L E I N F O A BS T RAC T

Keywords: Supply risk evaluation is intended for adjusting industrial structure, and provides limited options to reduce
Substance flow analysis supply risk. The links between supply chain and industrial structure deserve better understanding. In this way,
Supply chain the industrial activities can be managed to change industrial structure from supply risk. We took the
Supplier’ risk evaluation anthropogenic iron in Mainland China into our case study. The comprehensive evaluation was modeled to
Iron and steel
tackle the problems of China's iron and steel industry. From the life cycle perspective, we found that extending
Industrial structure
iron and steel supply chain would digest the oversupply and reduce the excessive emission, the main problems
affecting on the steel ratio for electric arc furnaces were steel scrap shortage and relatively high electrovalence,
and Fe content of the social stock basically resided in construction industry which significantly influenced on the
flow of steel products and steel and iron products. More attention should be paid to the factors of export price,
resource allocation efficiency, financing capability and outdated capacity, strict inspection and prevention
should be taken to these risks. A comprehensive picture of several customized risk reduction strategies was
constructed for those problems. Of the strategies, China’ risks of iron and steel industry could be reduced if the
existing industrial structure were adjusted on the basis of the substance flow networks and global iron and steel
industrial chains. Based on the result, recommendations were made in this paper, aiming to contribute
important reference information for the industrial metabolism, resource management, and recycling of iron and
steel industry in Mainland China. The proposed methodology, integrating suppliers’ risk evaluation based on
supply chain and substance flow analysis offers a quick and convenient examination on more comprehensive
risk reduction alternatives. Further dedicated risk evaluation might be required to estimate the more precise
risks for the iron and steel industries or other industries that were pre-identified as the outdated.

1. Introduction microchip manufacturing processes (You et al., 2001), the mass

Substance flow analysis (SFA) has gained prominence, as an
increasing number of researchers across the world have embarked on
the task of developing country and regional specific studies with broad
ranging applications in many fields. Previous studies using SFA were
conducted mainly to analyze flows of metals (lead, copper, zinc,
aluminium, iron, nickel, cadmium, etc.) on a very large system
boundary, such as at the local (Palmquist, 2004; Lindqvist and von
Malmborg, 2004; Zhang et al., 2014), regional (Igarashi et al., 2007;
Tabayashi et al., 2008; Lifset et al., 2012; Pauliuk et al.,2012; Cha et al.,
2013; Huang et al., 2014; Wang et al., 2014), or global scale (Mao and
Graedel, 2009; Elshkaki and Graedel, 2013). SFA has also been applied
to some production processes, such as material and energy inputs into
balance of waste water volume in a semiconductor factory (Williams
et al., 2003), or material and energy flows in iron and steel manufac-
turing (Michael, 1999; Michaelis and Jackson, 2000a, 2000b; Yu et al.,
2007; Zhang et al., 2013; Yellishetty and Mudd, 2014; Wang et al.,
2015). Although several previous studies explored the steel cycle and
created several models (Wang et al., 2007; Geyer et al., 2007; Lu and
Yue, 2010; Park et al., 2011; Pauliuk et al., 2012; Yellishetty et al.,
2014; Wang et al.,2014), their general modeling approach is an
analytical method used to systematically assess the flow and stock of
a material or substance through a given system (e.g. productive system,
economic or social system) by the principle of mass balance (Huang
et al., 2014), which should be clearly defined in space and time
(Bringezu et al.,1997; Brunner and Rechberger, 2004; Hendriks

⁎
Corresponding author. Permanent address: College of Earth Sciences, Gezi Buliding, Jianshe street 2199, Changchun city 130061, Jilin Province, China.
E-mail address: tina25790@qq.com (R. An).

http://dx.doi.org/10.1016/j.resourpol.2017.01.002
Received 20 June 2016; Received in revised form 23 December 2016; Accepted 3 January 2017
Available online 25 January 2017
0301-4207/ © 2017 Elsevier Ltd. All rights reserved.
J. Liu et al.
et al., 2000). In-use material stocks are often the major cause of
disconnection between system inflow and outflow in a given year,
meaning that dynamic SFA models lead to more accurate prediction of
future resource use and waste streams (Elshkaki et al., 2005). In recent
years, some studies have applied dynamic material flow analysis to
forecast production, recycling, and iron ore consumption in the
Chinese steel cycle until 2100 by using steel services in terms of in-
use stock per capita as driver of future development (Pauliuk et al.,
2012). SFA of steel in Australia, Brazil, China and India has been aimed
at providing better understanding of stocks and flows and to inform the
policy making for achieving the industrial metabolism (Yellishetty and
Mudd, 2014). Quantifying the Chinese steel flow from cradle to grave
could assist Chinese iron and steel industry to understand its historical
status and future options on production route transformation, capacity
planning, scrap availability, resource and energy consumption (Wang
et al., 2014). An enhanced dynamic modeling has been devised to
explore stocks and flows of buildings in China and to quantify the
related steel cycle (Wang et al., 2015). Almost all these studies outlined
above took advantage of the quantity function of flows of metals to
focus on the efficiency of substances or resources. However, supply
chain and suppliers’ risk evaluation were neglected, or at least not the
first concern in these studies.
A supply chain is a system of organizations, people, activities,
information, and resources involved in moving a product or service
from supplier to customer. Supply chain activities involve the trans-
formation of natural resources, raw materials, and components into a
final product that is delivered to the end customer. In sophisticated
supply chain systems, used products may re-enter the supply chain at
any point where residual value is recyclable (Anna, 2006). A typical
supply chain begins with the ecological, biological, and political
regulation of natural resources, followed by the human extraction of
raw material, and includes several production links before moving on
to several layers of storage facilities of ever-decreasing size and
increasingly remote geographical locations, and finally reaching the
consumer. There are a variety of supply chain models, which address
both the upstream and downstream sides. Supply Chain Roadmap is a
method where an organization's supply chain strategy can be reviewed
in an organized and systematic approach in order to assure alignment
of the supply chain with the business strategy. The method is supported
in the most important and recognized theories and practices about
supply chain strategy and business strategy (Perez, 2013).
The current economic environment is full of competition and
uncertainty, all kinds of uncertain factors contain risk in the integrated
supply chain. As the upstream supply chain enterprises, suppliers are
playing an important role. The suppliers’ risk is one of the main sources
of the supply chain risk, so it becomes the important issue in the
current economic environment. Recently, as the awareness of the
suppliers’ risk is improving, the related researches are also carried
out deeply. Some analyzed the source of the suppliers’ risk from the
perspective of the whole supply chain, the multilevel supplier risk index
system is provided based on the theory, the suppliers’ risk management
is discussed, which pointed that the way to reduce the suppliers’ risk is
to strengthen the control of the supply chain's optimization (Sun, 2009;
Wu et al., 2008; Liu and Liu,2012). According to supply chain structure
division, the cooperation relationships between enterprise and supplier
are divided into type A, type V and type T (Liu and Liu, 2012). A further
study is done on type A. Based on the type A cooperation, the suppliers’
risks contain the external risk effected by natural factors and market
volatility factors and the internal risk effected by the change of internal
factors in the dynamic cooperation systems. Because the influence of
factors are random and fuzzy, it is usually inaccurate for suppliers’ risk
prediction. From this perspective, the method is used based on the
likelihood of the fuzzy mathematics to study the suppliers’ risk degree,
which will make suppliers’ risk evaluation more accurate. The general
statistical samples can be seen as random set projection theory of single
point, fuzzy sets can be manifested as random sets and random sets of
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Resources Policy 51 (2017) 272–282
fall shadow also conform to shadow of large number theory (Qin and
Wei, 2008; Liu and Liu, 2012). Therefore, the fuzzy mathematics model
is used to have a comprehensive supplier’ risk evaluation and the
effective risk prevention measures are put forward based on the theory
which aims to provide references for enterprises’ risk evaluation and
prevention (Liu and Liu, 2012).
The main goal of our research is to construct a comprehensive
picture of customized risk management strategies based on SFA,
supply chain and supplier’ risk evaluation. We’d like to enhance the
methodology of supply risk evaluation in order to highlight the
problems of iron circulation and the iron and steel industries of
concern. The subsequent management measures can then focus on
the structure of iron and steel industry, and examine the effects of the
scenarios on supply risk reduction. The way to reduce the supply risk is
to strengthen the control of the supply chain's optimization. We took
iron and steel industry in 2011 in Mainland China as an example; the
proposed methodology framework may also apply to other nations and
regions.
2. Methodological and ideological options
Risk analysis and risk reduction can benefit from the model which
enables comparison of scenarios with different risk management
measures. Wu and Olson (2009) emphasized the benefit of risk
modeling for risk control, especially the optimization of risk manage-
ment. Our model combining SFA and risk evaluation has two advan-
tages. First, the SFA screening of the most relevant factors enriched the
domain of risk reduction solutions, e.g., changing an industrial
structure. Second, we estimated the risk in the fuzzy model and supply
chain which are end-point indicators, rather than the mid-point
indicator which was used in most SFA studies. The factors of higher
risk of supply can be identified.
The proposed methodology integrating suppliers’ risk evaluation
based on supply chain and SFA, for a case study of the iron and steel
industry in mainland China the year 2011, is to offer quick examination
on more comprehensive risk reduction alternatives. The integration of
SFA to risk evaluation is implemented in the step of data collection and
SFA framework formulation in following steps:
1. Identify the processes with iron input / outputs inputs/outputs and
the goods containing iron.
2. Link the processes with the substance flows according to the supply
chain or life cycle information.
3. Collect the data of goods flows with corresponding Fe contents.
4. Establish the substance flow models and flow charts.
5. Disaggregate the substance flow system into three main streams.
6. Do the suppliers’ risk evaluation based on the Fuzzy model.
2.1. Substance flow analysis (SFA)
Following the general procedures of SFA (Van der Voe, 1996; Udo
de Haes et al., 1997; Brunner and Rechberger, 2004; Geyer et al., 2007;
Huang et al., 2014), we assume that the spatial boundary is Mainland
China considering the annual flows in year 2011. The system bound-
aries are thus the geographical borders of Mainland China. By iron and
steel we mean all economic iron and steel qualities, but data of all
alloying elements are not contained in this study. The present study is
therefore a substance flow analysis, which would only account for the
Fe content of the material flows (Van der Voet, 2002; Graedel, 2002;
Geyer et al., 2007).
We presented the static iron flow model in two forms. The first
model is a production network which specifies several supply chains of
iron related products. In principle, the flows associated with a process
are categorized as import, export, interflow between processes, or
emissions that return to the environment. The second model sum-
marizes the overall iron flow from a life cycle perspective. All processes
J. Liu et al.
Fig. 1. Supply chain for iron and steel in Mainland China. Notes: This figure is modified from supply chain by Geyer et al. (2007). Inputs are shown in ovals and production processes
in square boxes; Dotted single-headed arrows denote iron losses or/and recycling from the system during product processing; Full double-headed arrows denote trade international and
overseas deals of Fe mass across the system boundary; Full single-headed arrows denote flow direction of Fe mass within the system boundary.
involving iron flow were organized according to a sequence of life cycle
stages that include mining, milling, smelting, refining, fabrication and
manufacturing, use or consumption, and waste management. The
framework combining economic and environmental systems was
investigated with relevant processes. The flows as emission crossing
the interface between two systems were surveyed as well, for a better
understanding of how China’ production chains lead to overcapacity.
We considered the industries that use raw materials containing Fe
as well as the waste treatments that determine the destination of waste
and scrap containing Fe. The measurements were based on the total
iron flow. Each flow was the multiplication of goods flow with
corresponding Fe content. At present, there is some relevant steel
and iron SFA databases available in Main China. However, there is
little information available on uncertainty for some stock and flow data.
Compared with imports of iron ore, the proportion of export volume is
small and can be neglected. Because of trade of final products in use or
consumption involving import and export data in different areas and
estimated average Fe content, there is not unified statistical data
sources which have great difference and certain inaccuracy. We will
not enter the discussion of the data sources for the moment. In
addition, the losses of steel and iron products in use are derived from
corrosion and consumptive use. In the absence of systematic, reliable
statistics, the losses could be excluded from consideration.
Based on the collective judgment of the authors regarding the
reliability and quality of the data, high confidence data include CISA
(China Iron And Steel Association) data, Worldsteel (World Steel
Association) data, ISSB (International Steel Statistics Bureau) data,
Chinese official (National Bureau of Statistics (China), NBS; Ministry of
Land and Resources (China), MLR; General Administration of Customs
(China), GAC; Ministry of Commerce (China), MOFCOM; National
Development and Reform Commission (China), NDRC) data, estimated
or validated data mainly based on official data and CISA data, and data
of a similar quality from other sources. Lower confidence data include
the authors’ estimated values mainly based on unofficial data sources
such as published literatures whose data may be from specific experi-
mental conditions, industrial reports where the data may be affected by
economic interest or reporters’ attitude, dissertations and so on.
However, all data in the Results have been validated by mass balancing,
and most are similar to CISA or official estimates, which tend to
confirm our estimates for some missing data, and is in accordance with
the history and present situation of the Chinese steel and iron industry.
The unknown inputs and known input were balanced with total outputs
as products and emissions. Information about Fe content was gathered
from a broad literature review (Yan, 2013; Zhang, 2014). These papers
choose the year 2011 as the reference so as to ensure data availability
and quality. Because an unpublished iron SFA report from China
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Resources Policy 51 (2017) 272–282
Geological Survey is based on official data sources and published
literatures.
2.2. Supply chain modeling
There are a variety of supply chain models, which address both the
upstream and downstream sides. Method is applied in four steps:
scope, understanding, evaluation, and, redesign and deployment
(Anna, 2006; Geyer et al., 2007; Perez, 2013).
2.2.1. Scope
The aim of this study is to document and analyze the production
and consumption of iron and steel in Mainland China since 2011. The
boundaries are thus the geographical borders of Mainland China. By
iron and steel we mean all economic iron and steel qualities, i.e. we
account for all alloying elements that are contained in the metal matrix.
2.2.2. Understanding
Supply chain for iron and steel involve the transformation of
natural resources, raw materials, and components into a final product
that is delivered to the end customer. In sophisticated supply chain
systems, used products may re-enter the supply chain at any point
where residual value is recyclable (Anna, 2006). The three process
groups describe the domestic transformations from one material
category into another, i.e. all material conversions taking place within
Mainland China borders. They reduce the stock of input material and
add to the stock of output material. Import and export activities, i.e. the
transportation processes across Mainland China borders for each
material category, complete the system (Geyer et al., 2007).
2.2.3. Evaluation
Our model of China iron and steel production and consumption
consists of three groups of transformation processes (production,
fabrication and manufacturing, use), and four different material
categories (iron ore, iron and steel scrap, iron and steel products, iron
and steel in new final goods) (Geyer et al., 2007). Iron flow within the
supply chain is more complicated. It is illustrated in more detail in
aggregated form in Fig. 1, which helps identify the critical processes
associated with Chinese iron and steel production and consumption.
Fig. 2 shows the three production routes in some detail.
2.2.4. Redesign and deployment
Informed supply chain strategies can be designed based on the
analysis that highlights the interaction between the iron and steel
industries, its initial sources, eventual sinks and the pathways linking
them. On the other hand, we also take into consideration iron and steel
J. Liu et al. Resources Policy 51 (2017) 272–282

Fig. 2. Iron and steel production routes in Mainland China. Notes: This figure is modified from production routes by Geyer et al. (2007) and Pauliuk et al. (2012). Inputs and outputs
are shown in ovals and production processes in square boxes; Full single-headed arrows denote flow direction of Fe mass across /within the system boundary.

Table 1
Supply risk appraisal index system of iron and steel industry. Chinese market now. Under this background, to some suppliers, the
worst consequence is that some management and investment funds
Classification First level indexes (Ui) Second level indexes (Ui,j) will lost, and after a certain period of funds circulation they will come
to a bad situation such as lack of money and orders, declining in sales
External risk Resource allocation (U1) Natural endowment (U1,2)
Resource allocation efficiency
and inventory increases. Thus, capital return rate and financing
(U1,2) capability are the major influence factors. Price of iron and steel may
Great depression(U2) Capital return rate (U2,1) reflect that supplier have come into financial problems which even will
Financing capability (U2,2) lead to bankruptcy. These signals are expressed by producer price
index and export price index. Supply is of great importance for iron
Internal risk Price of iron and steel(U3) Producer price index (U3,2)
Export price index (U3,2) resource management, classified into addition of new capacity and
Supply of iron and steel Addition of new capacity (U4,1) outdated capacity. Enterprise culture indicates that close cooperation
(U4) Outdated capacity (U4,2) calls for the unanimous agreement, coordination and trust. The risk of
Enterprise culture(U5) Cooperation satisfaction index
cultural differences happened in various aspects of the cooperation. So
(U5,1)
Information sharing degree
we choose cooperation satisfaction index and information sharing
(U5,2) degree as the risk indexes. Waste treatment has become a hot topic
Waste treatment (U6) Recycling of steel (U6,1) of every country in the world now. In the upstream supply chain,
Emission reduction rate (U6,2) suppliers are obliged to fulfill policies and regulations well formulated
by the government when cooperated with the downstream partners in
Data sources: The 3rd Experience Exchanging Forum of Mining Investment 2015
successfully held in Beijing City, China on December 20th. The theme of the forum was
order to achieve the goal of utilize iron resource measurably. So the
“when to bargain-hunt in global mining industry as well as roadshow and review for main risk indexes include recycling of steel and emission reduction
mining projects” co-organized by Beijing Suntrans Language Translation Co., Ltd. and rate.
China Mining Association. According to the internal risks and external risks, select some of the
main factors for the construction of the risk index system. From the
industry in Mainland China facing the risks of export price, emergency perspective of the high probability of risk and greater loss and
plan, financing capability, outdated capacity, and excessive emission to according to the principle of the system design, we select the indexes
strengthen the control of the supply chain's optimization. that are easily measured and quantified for the suppliers. The second
level risk evaluation system should have greater adaptability in case of
2.3. Suppliers’ risk evaluation the harder work and higher cost, so it could be suitable for most cases.
In view of this, the influence factor set, U, the evaluation index system
The fuzzy model was chosen for suppliers’ risk evaluation as the consists of 6 first level and 12 s level indexes. Those aspects of my risk
following (Wu et al., 2008; Qin and Wei, 2008; Sun, 2009; Wu and assessment summarized in Table 1 are identified combined with the
Olson, 2009; Liu and Liu, 2012). current market characteristics in our economy and the internal risks
and external risks. Those aspects were decided by the 10 experts among
2.3.1. Analysis on the risk indexes deposit geology, geological exploration, metallurgy, steel industry,
From the perspective of the cooperation type, combined with the resource economics, resource management, mining investment, fi-
changes in the domestic market and development situation, some risk nance, trade, and other specialists in different areas to have an
factors are selected, which were easily ignored by us and can reflect the independent judgment, in case of its field limitation which will cause
risk. The risk factors are classified into external risks and internal risks. the risk evaluation result unreasonable. We describe a little more on
External risks consist of resource allocation and great depression, this in the following.
whereas internal risks are composed of price, supply, enterprise culture Iron ore results from particular geological conditions, and usually
and waste treatment. Generally, in addition to carry out a strict occurs in the particular location of areal structure zone or depositional
inspection and assessment about great depression, price and supply, system. No the total identified resource reserves or retained resource
some factors such as resource allocation, enterprise culture and waste reserves in scale in Mainland China has a high iron grade. There are
treatment that often be overlooked should be taken into considered. about 2000 Mt (million tonnes) of resource reserves of rich ore with an
Resource allocation is of great importance for natural endowment and iron grade of over 50%, in turn, over 53,000 Mt of resource reserves of
resource allocation efficiency. The former have been offered to support lean ore with a iron grade between 20% and 50%, and around 8000 Mt
resource allocation geologically, closely associated with present situa- of resource reserves of extremely lean ore with an iron grade of less
tion of iron resources and iron ore deposits in China. The latter is than 20%. All those indicate that the total amount of China's iron
sufficient to derive interesting resource allocation rules which ensure resource is abundant, but which have the characteristics of larger lean
that capacity of facilities and operating rates is performed by suitable ore, little mine with rich grade, complicated ore type, difficult utiliza-
iron resource. Great depression is an important phenomenon in tion on temporary. As of the end of 2011, the total identified resource

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J. Liu et al.
reserves or retained resource reserves in China come to 84,028 Mt, and
74,647 Mt, respectively (Li et al., 2012). The unoccupied retained
resource reserves from totally unoccupied ore district and partly
occupied ore district come to 37,874 Mt, accounting for 60% of the
total retained resource reserves. Of these, unoccupied retained reserves
2019 Mt, unoccupied retained basic reserves 2602 Mt, and unoccupied
retained resources 35,272 Mt, indicating the potential for greater
development and utilization, and mainly retained resources (Li et al.,
2012).
In our economy, industries produce products to supply the demand.
Some supply chains of iron- and steel containing products or services
have been broken, because of the overcapacity problem in China's iron
and steel industry. The recent increase in iron ore production has been
driven by rapid development of the Chinese iron and steel industry. In
2011, China had become the world's largest producer, since iron ore
production added up to 1330 Mt, accounting for less than 50% of world
iron ore production (MLR, 2012; NBS, 2012; Li et al., 2012); it had
also become the world's largest consumer, as its pig iron (or cast iron)
production soared to 645.79 Mt, accounting for 58.5% of world cast
iron production (NBS, 2012; The Editorial Board of China Steel
Yearbook, 2012; Worldsteel, 2012); its crude steel production
amounted to 684Mt, accounting for about 45.1% of world crude steel
production (Worldsteel, 2012; MLR, 2012; NBS, 2012); its crude steel
consumption was 624Mt, accounting for 43% of world crude consump-
tion (Worldsteel, 2012; The Editorial Board of China Steel Yearbook,
2012). Mainland China therefore has an increasingly important role to
play in supporting sustainable use of global iron resources, and the
identification of potential savings in the processes of iron production,
fabrication and manufacturing, consumption and recycling is an urgent
task. On the other hand, the share of secondary steel production in
China decreases from 25.63% in 1990 to 10.1% in 2012, against the
background that the world average level experiences a 13% rise to
29.2% in 2012 (Wang et al.,2014). Regardless the obvious reasons like
huge production and low utilization efficiency, the imbalance between
supply and demand should be responsible for this phenomenon.
Overexploitation of iron ores lead to irrational resources allocation
as well as iron and steel industry in Mainland China is facing the supply
risks. Supply risk analysis and risk reduction are critical issues to
possess a sustainable iron and steel industry. Different types of risks
are of concern in the sustainable iron and steel industry. For example,
the environmental risk may arise from the release of hazardous
substances. The operation of advanced processes also exposes the
workers to health risk in their workplaces. The outdated capacity
increase the risks on the supply management, caused by the structure
of iron and steel industry.
According to these judgments, we can set up a roughly correspond-
ing relationship between the ten (the different areas) and supply chain
for iron and steel or iron cycle in Mainland China, with appropriateness
of the methods integrating supplier’ risk evaluation based on supply
chain and SFA. Although some aspects of the six (Ui) are not to be
derived from the results of SFA, there will be no deviation in the scores
among the judgments.
2.3.2. Establish the risk evaluation mathematical model
2.3.2.1. Application of the fuzzy model. The suppliers’ risks contain
the external risk effected by resource endowment factors and market
volatility factors and the internal risk effected by the change of internal
factors in the dynamic cooperation systems. Because the influences of
these factors are random and fuzzy, it is usually inaccurate for
suppliers’ risk prediction. From this perspective, the method is used
based on the likelihood of the fuzzy mathematics to study the suppliers’
risk degree, which will make suppliers’ risk evaluation more accurate
(Liu and Liu, 2012). The general statistical samples can be seen as
random set projection theory of single point, fuzzy sets can be
manifested as random sets and random sets of fall shadow also
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Resources Policy 51 (2017) 272–282
conform to shadow of large number theory (Qin and Wei, 2008).
Therefore, the fuzzy analysis method was used to have a quantitative
suppliers’ risk evaluation.
2.3.2.2. Made an independent evaluation about the 12 s level
indexes. Adopt a hundred-mark system and have an independent
judgment according to the SFA and supply chain, economic
conditions. And then normalize the predication and get the weight of
influence factors (weighting vectors), A.
2.3.2.3. Establish the evaluation model. Similarly, we adopt hundred-
mark system, the lower the expert marked, the lower the final
evaluation value. The evaluation set, V=(V1, V2, V3, V4, V5)=(safety,
good, vigilance, risk, and loss). The set of the suppliers’ evaluation are
carried out. By means of grading matrix and a Fuzzy Casting from U to
V, the single-factor evaluation is accomplished. Using the grading
matrix, the initial evaluation results have been calculated into single
indexes, and then the comprehensive evaluation matrix (fuzzy
evaluation matrix), R, is established. According to it, R can be found.
The fuzzy model of M (*, +) is used for comprehensive evaluation, fuzzy
comprehensive judgment, B, can be found:
B = A*R (1)
2.3.2.4. Results and analysis. After the entreating of judge index,
using the largest judge index as the result of judge results of
corresponding remark gathering, M = max (b1,b2,…bm), that is the
Fuzzy synthesis evaluating conclusion.
2.3.3. The risk prevention
Some theories were provided for the suppliers’ risk prevention
(Salonen, 2011; Feng and Li, 2011). But most of the methods remained
in the theory level which application rate is low and the applicability is
limited. So it is necessary for us to study suppliers’ risk evaluation and
prevention according to the current trend and problems of social
development and iron and steel industrial own characteristics.
2.4. Strategy evaluation
In the final step, as interpretation, we identified the processes or
stages with significant production routes, the substance flow network
for customized risk management strategies, together with global iron
and steel industrial chains customized risk management strategies.
These processes and stages were considered the targets to eliminate
supply risk. The management of iron input into downstream industries
could also improve the system. We examined the effects of risk
reduction for the alternatives derived from the SFA, supply chain
strategy and supplier’ risk evaluation and local industrial structure
analyzed for the country.
3. Results
3.1. Iron cycle in Mainland China
The iron cycle in the Chinese economy is illustrated in Fig. 3.
However, for Fig. 3, there is little information available on uncertainty
for some stock and flow data. I also think consideration of trade of final
products would be very important for China, a country with a role of
the world factory. Actually, this is already the practice in many previous
studies on China's steel cycle (Wang et al., 2007, 2014, 2015; Pauliuk
et al., 2012). The iron content embodied in a country's import/export
of semi-manufactured parts and final products cannot be overlooked.
J. Liu et al.
Fig. 3. A simplified schematic chart of a technological iron flow (units: Mt Fe/annum) (modified from Yan (2013)). Inputs are shown in square boxes; Full single-headed arrows denote
flow direction of Fe mass within or and across the system boundary. The social “stock” in the domestic steel market in late December 2011 is shown in the box of fabrication and
manufacturing, and the “stock” in the box of use refers to the ΔRs.
For this purpose, the present study explored the United Nations
Commodity Trade (Comtrade) Database. Under the Standard
International Trade Classification (SITC) code system with 3- to 5-
digit resolution, nearly 220 categories of commodities were found to
contain iron. These trade flows were computed and aggregated into the
iron cycles (Wang et al., 2007). For example, parts and final products,
7.1Tg, exported to other regions in 2006 (Wang et al., 2007). In fact,
parts and final products consist of semi-manufactured parts and final
products. Note that trade flows of steel products (semi-manufactured
parts) in Fig. 3 are 34.70 Mt, and trade flows of final products in Fig. 3
have been excluded from consideration. Because of trade of final
products in use or consumption involving import and export data in
different areas and estimated average Fe content, there is not unified
statistical data sources which have great difference and certain
inaccuracy (Yan,2013; this study). We will not enter the discussion of
the data sources for the moment. Compared with imports of iron ore,
the proportion of export volume is small and can be neglected. Taken
together, these data indicate that it is very difficult for me to study on
these trade flows of final products computed and aggregated into the
iron cycles. In addition, the losses of steel and iron products in use are
derived from corrosion and consumptive use. In the absence of
systematic, reliable statistics, the losses could be excluded from
consideration.
Seen from Fig. 3, we can observe three main streams. First, iron
moves along the production and consumption flow that use iron
containing compounds as a resource. Second, iron moves along the
import and export flow that brings into and out of iron containing
compounds. Third, all processes also brings iron into the environment.
In the three streams, more than 905.53 Mf Fe content entered the
Chinese iron and steel production in 2011. More than 904.59 Mt of
iron ores entered the production in which imports were more than
439.09 Mt which was about 49% of the total consumption. More than
911.94 Mt of Fe content entered the Chinese economy through mineral
extraction, producing steel scrap, recycling waste and scrap and
importation, of which the domestic mineral extractions (465.50 Mt
Fe content) accounted for 51%, and of which the total imports
(446.85 Mt Fe content) 49% in the form of iron ore, crude steel, steel
scrap and pig cast. In 2011, more than 34.69 Mt Fe content of steel
products were exported the foreign countries, and the output Fe
content to the environment was 368.90 Mt, in the process of the
mining, milling, smelting, refining, fabrication, manufacturing, recy-
cling. Because Fe content of domestic discard of iron end-products
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Resources Policy 51 (2017) 272–282
were 65.50 Mt, subtracting the exports and discards in production and
consumption, in-use stock of iron end products must be 529.78 Mt Fe
content of the 595.28 Mt total available iron used in manufacturing.
The difference between the flow and stock accumulated in the
economy called the net “implicit” stock (NIS). While the overcapacity
can be discussed on the basis of capacity of facilities and operating
rates of them, the NIS, 382.16 Mt (911.94–529.78 Mt) Fe content in
2011 may have some relations with China's overcapacity now runs as
high as 300 Mt (330.69 Mt) in 2015. On the other hand, the ΔRs
(where should rather be the change of the social stock), 529.78 Mt Fe
content resided in use or consumption. Therefore, it is supposed that
the gap between the ΔRs and demand has already decreased sharply in
2011.
Subtracting the export which was about 1/13 of the total input Fe
content, the remained net input Fe content was around 411.73 Mt. The
difference between the input and output accumulates in the economy
and is called the net addition to stock (NAS). The NAS, 42.83 Mt
(411.73–368.90 Mt) of 529.78 Mt Fe content resided in use or
consumption.
However, the 368.90 Mt emission of Fe content could be released in
the future. The poisonous & harmful waste and scrap containing
compounds in the environment may escape through dispersion or be
disposed of. The emission today from the system could increase the
environmental and healthy risk in the future because strong chemical.
Importantly, 368.90 Mt emissions cause a huge waste of resources to
the community, compared to the domestic mineral extractions of
465.50 Mt Fe content or the total imports of 446.85 Mt Fe content in
2011, and to our addition of new capacity of 30 Mt a year.
3.2. Supply chain for iron and steel
3.2.1. Production
The first stage of production is mining and milling of the iron ores.
Milling produces tailings and concentrates; the concentrates are fed
into smelter to produce pig iron and slag; pig iron is further refined into
crude steel with high purity. The emission in these processes will be fed
back into the stage of production to retreat and into the environment.
In Mainland China, open mining and underground one were both
found. Most were of the latter. Home mining is becoming more and
more difficult because of energy costs. The different physical properties
between ore and gangue are most widely used in mineral processing so
as to separate them. The two ore milling technologies used in Mainland
J. Liu et al. Resources Policy 51 (2017) 272–282

Table 2 purchase them for the services they provide. At this point, they enter
The original score matrix for iron and steel suppliers. the use phase, which is thus the ultimate reason for and destiny of the
different iron and steel flows through production, fabrication and
No. U1 U2 U3 U4 U5 U6
manufacturing.
Judgment1 100 90 90 90 90 100 The use of steel comprises use and stock. The products in use may
Judgment 2 80 90 60 70 80 100 be assembled ones, or infrastructures to build up bigger systems. In
Judgment 3 70 90 60 75 85 90
2011, These products mainly serve in Chinese construction industry
Judgment 4 80 80 75 80 80 90
Judgment 5 100 90 80 90 80 100 (48.5%), machinery manufacturing industry (17%), automotive indus-
Judgment 6 90 85 75 85 85 95 try (7.3%), communications and transportation industry (5.2%), home
Judgment 7 85 80 80 80 80 90 appliance manufacturing industry (2.2%), shipbuilding industry
Judgment 8 85 75 65 75 85 95 (2.2%), container manufacturing industry (1.2%), hardware products
Judgment 9 80 90 60 75 85 80
industry (3.2%), electric power industry (0.6%), petrochemical indus-
Judgment 10 70 70 75 80 80 80
Average value 84 84 72 80 83 92 try(1.4%), metal packaging industry (1.2%) and the others (10%) (NBS,
Normalization 0.169 0.169 0.145 0.161 0.167 0.185 2012; The Editorial Board of China Steel Yearbook, 2012; Yan, 2013).
Of them, the structure of iron and steel consumption of Mainland
China in 2011 indicates that the most main consumers are construction
China are Froth flotation process and Magnetic separation at integrated industry (Pauliuk et al., 2012; Yan, 2013; Wang et al., 2014, 2015),
steelworks. Across milling technologies, we can collect mineral pow- accounting for 48.5% of the total final goods, followed by machinery
ders and concentrates as a furnace burden after they are sintered and manufacturing industry.
agglomerated. The pig iron production technologies used in Mainland
China are blast furnace at integrated steelworks. Blast furnaces furnace
consumes sintered iron ore and produces liquid pig iron. The two steel
production technologies used in Mainland China are blast furnace/ 3.3. Supplier’ risk evaluation
oxygen furnace and electric arc furnace (Pauliuk et al., 2012). Blast
furnaces furnace consumes sintered iron ore and produces liquid pig We take into account according to the SFA, onsite monitoring and
iron, which is transported to the oxygen furnace. In the oxygen furnace investigation and Chinese economy and expert judgment, and have an
the carbon content of the pig iron is reduced, remaining impurities are original score matrix as shown in Table 2. According to the theory of
removed and alloying elements are added scrap is added as cooling fuzzy mathematics, each index has different effect to the original score
agent since exothermic oxidation processes heat the furnace above its to some extent, so the average value should be figured out first. The
requirements. After the oxygen furnace the molten steel is refined and sum is 495 and then normalized it:
cast. Electric arc furnaces rely mainly on scrap as iron source but are A = (0.169, 0.169, 0.145, 0.161, 0.167, 0.185)
also capable of using directly reduced iron from ore as an alternative
input. Blast furnace/oxygen furnace kept the steel ratio at 87–92% all Based on A and V, the set of appraisal matrix for steelworks are
the time. The electric arc furnace was followed by secondary metallurgy shown in Table 3. According to Table 3, we obtain the set of matrix, R.
and casting and in steelmaking was about 10% of the total crude steel
production. In the past decade, lots of pig iron or molten iron was fed ⎛ 0.2 0.3 0.4 0.1 0 ⎞
⎜ 0 0.1⎟
into EAF (electric arc furnace) and the scrap usage of EAF fluctuated ⎜
0.3 0.5 0.1
⎟
slightly (Pauliuk et al., 2012). Thus, the real scrap-EAF route share is ⎜ 0.3 0.2 0.3 0.2 0 ⎟
much lower than the EAF production share (Wang et al., 2014). At the ⎜ 0.1 0.3 0.6 0 0 ⎟
⎜ 0 0.1 0.3 0.4 0.2 ⎟
same time, the proportion of the world electric arc furnace steelmaking ⎜ 0.2 ⎟
R=⎜ 0 0 0.2 0.6
basically remained at around 33%. It is supposed that it has a
⎜ 0.3 0.4 0.2 0.1 0 ⎟⎟
significantly contribution to the energy consumption and emissions ⎜ 0.1 0.4 0.4 0.1 0 ⎟
of carbon dioxide. ⎜ 0.2 0.3 0.3 0.2 0 ⎟
⎜ 0.2 0.3 0.4 0 0.1⎟
⎜ 0 0.3 0.4 0 0.1⎟⎟
3.2.2. Fabrication and manufacturing ⎜
⎝ 0 0.2 0.5 0.2 0.1⎠
Integrated steelworks, mini-mills and foundries produce the liquid
steel and iron products that fabricators transform into components, The fuzzy model of M (*, +) is used for comprehensive evaluation,
like the landing gear of airplanes or the drum of a washing machine, results can be found by Eq. (1).
which are then used in final goods manufacturing. The manufacture of
iron and steel concerns the production of semi-products and the B = (0.34, 0.52, 0.76, 0.35, 0.13)
assembling of final goods, while the flows comprise the fabrication of
steel products, the manufacture of semi-products and final goods. The
Table 3
processing products and scrap flow out of the fabrication and manu- The set of appraisal matrix for iron and steel suppliers.
facturing process as various steel products or steel and iron products,
while several home scraps/new scraps are produced such as leftover Ui Ui,j V1 V2 V3 V4 V5
materials and lathed scrap, which will be fed back into the stage of
U1 U1,2 2 3 4 1 0
production, manufacture and fabrication to retreat and into the U1,2 0 3 5 1 1
environment. Besides this there are also some old scraps or/and home U2 U2,1 3 2 3 2 0
scraps or/and waste and scrap from domestic parts and abroad which U2,2 1 3 6 0 0
U3 U3,1 0 1 3 4 2
flow into the stage of production or/and fabrication and manufactur-
U3,2 0 0 2 6 2
ing. The manufacturer assembles the semi-products (i.e., steel pro- U4 U4,1 3 4 2 1 0
ducts) from the fabricators into final goods, for example, a car, a U4,2 1 4 4 1 0
washing machine or a personal computer. U5 U5,1 2 3 3 2 0
U5,2 2 3 4 0 1
U 6 U6,1 0 3 4 2 1
3.2.3. Use U6,2 0 2 5 2 1
Final goods are manufactured to be sold to end customers who

278
J. Liu et al.
4. Discussion
4.1. Iron cycle in Mainland China
The SFA specified the emission quantities with associated sources.
In each streams, refineries, especially steelmaking contribute the most
emissions into the air, water and soil. This reveals an opportunity to
significantly reduce the environmental risk. Research showed that the
emission from refineries into the soil was higher than into the air, the
major source of soil accumulation was waste management.
Under steady-state circulation of iron in 2011, the iron utilization
efficiency in Mainland China would be a great concern to capacity in
future. Under steady-state iron loss in 2011, the losses in Mainland
China will be a great concern to resource depletion in future. The
immediate consequence with wasteful resource is pollution serious.
Under steady-state emission (368.90 Mt Fe content) in iron and steel
industry in 2011, the emission in Mainland China will be a great
concern to environmental pollutant in future. Thus, three practical
alternatives to tackle China's the problems of iron and steel industry
could be considered. First, And adjusting the industrial structure based
on extending iron and steel supply chain will promote the flow of steel
products and steel and iron products. Second, the recycling rates plays
a very important role and the future scrap supply might not be as
optimistic as some researchers’ estimations due to the possibility of
prolonging construction's lifetime (Wang et al., 2014). Third, control
technologies help to optimize the portfolio of emissions into another
medium, changing both the paths from source to environmental media
and exposure pathway.
4.2. Supply chain for iron and steel
The main problems affecting on the steel ratio for electric arc
furnaces are steel scrap shortage and relatively high electrovalence.
Most of Fe content of the social stock (ΔRs) basically resided in
construction industry which significantly influenced on China’ iron and
steel industry supply chain. With construction of new buildings turning
down and obsolescence of old buildings rolling up, the construction
industry will have to shift its focus to maintenance, renovation, and
end-of-life management of the growingly aging building stocks (Wang
et al., 2015). The scrap supply in China will rise significantly in the
future, meanwhile, the secondary production route share will grow
sharply and exceed primary production share before or after 2050
depending on our options. The scrap recycling rate and construction's
lifetime play a vital role in this trend (Wang et al., 2014). This pattern
change will be strengthened if the lifetime of buildings is elongated. It
also indicates that the development of the real estate industry when
Chinese economic environment is good directly introduces the steel
industry capacity allocation (Sun et al., 2017).
It is commonly accepted that as China strives to sustain growth,
supply-side reform is the latest tool to be taken from the box and
sharpened. The existing problems in the sector have been exacerbated
in recent years by slowing growth, structural adjustments in the
economy and policies to reduce the old capacity in the steel industry
in Mainland China. Grasping accurately these rules is the premise of
achieving market's decisive role in the resource allocating process while
giving full play to government function (Sun et al., 2017).
Therefore, redesigning and deploying China industrial structure
based on extending iron and steel industry supply chain is required for
more useful, effective, or promising supply chain's optimization.
4.3. Supplier’ risk evaluation
Because the 0.76 is the maximum value, according to the principle
of maximum degree, China's iron and steel supplier’ risk degree goes to
vigilance, which means that China should alert for its supplier and
adjust risk link timely. As the same time, the external risks consist of
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Resources Policy 51 (2017) 272–282
resources allocation and great depression got a lower appraisal score,
and the internal risks consist of price of iron and steel and supply of
iron and steel got a lower appraisal score, which indicates that these
factors should be given more attention because of the higher risk
degree. It can be found that most experts take a vigilance attitude
towards resource allocation efficiency in resources allocation, financing
capability of great depression risk and outdated capacity of supply of
iron and steel risk, they take a risk attitude towards export price of
China’ iron and steel industry.
Therefore, more attention should be paid to the factors of export
price, resource allocation efficiency, financing capability and outdated
capacity, strict inspection and prevention should be taken to these risks
accordingly.
4.4. Strategy evaluation
Informed risk management strategies can be designed based on the
above analysis that highlights the interaction among iron cycle, supply
chain, and supplier’ risk evaluation. We also take into consideration a
few much more in-depth analyses for Chinese iron cycle in the
literature, as discussed in detail in the previous studies (Park et al.,
2011; Pauliuk et al., 2012; Yellishetty et al., 2014; Wang et al., 2014).
Below, a comprehensive picture of several strategies customized for
major routes are assessed as illustrations (Figs. 4 and 5).
Firstly, control the two stages of production of crude steel and
recycling of scrap iron and steel products. Sustainability of iron use
may be improved by shrinking China's mining and milling capacity.
Promote the flow of steel products and steel and iron products.
Improve steel ratio of electric arc furnaces, and use secondary resource
of raw material, i.e. recycled as iron and steel waste and scrap (Fig. 4).
This would require advanced recycling technologies as manufacturers
of machinery and transportation equipment would have to shift to
secondary steel as well as new capacities in secondary production
which could, however, make redundant already existing integrated
steel plants (Pauliuk et al., 2012; Wang et al., 2015).
Secondly, changing the industrial structure based on extending iron
and steel industry supply chains. The chains characterize outsourcing,
globalization, lean supply chain initiatives and supplier rationalization.
Especially, it is typical of operations management for prospectors,
scientists, miners, millers, smelters, refiners, fabricator, manufac-
turers, retailers, consumer, re-user, financial services companies, IT
companies, power plant, construction industry, government agencies,
international traders and transnational enterprises. The organization is
highly dependent on suppliers to achieve business objectives for China’
iron and steel industry and is in the core of the cooperation. This shows
an idea for a cooperation relation among iron and steel enterprises,
financial services companies, IT companies and offshore industries,
et al., which highlights the interaction among mass flow, technology
flow, business flow, business flow, capital flow (Fig. 5). On the other
hand, this shows an idea for global iron and steel industrial chains
based on cooperation relations. Global iron resource information
database and financial capital are links to iron and steel industry and
their upstream and downstream industries at home and abroad
(Fig. 4), which is an integrated iron and steel group corporation,
resulting from outsourcing, globalization, lean supply chain initiatives
and supplier rationalization (Fig. 5).
Thirdly, take a strict inspection and prevention to these risks of
export price, resource allocation efficiency, financing capability and
overcapacity before they happen (Figs. 4 and 5). In order to prevent
risk of export price, an integrated iron and steel group corporation –
global iron and steel industrial chains should be established (Fig. 5).
Derive interesting resource allocation rules to ensure capacity of
facilities and operating rates, performed by suitable iron resource
and the substance flow networks (Fig. 4). Iron and steel industry
should take conservative financial plan, pay attention to the accumula-
tion of funds, reduce the liabilities and focus on cash flow, maintain
J. Liu et al. Resources Policy 51 (2017) 272–282

Fig. 4. The substance flow networks for customized risk management strategies. Compared with Fig. 3 based on Fig. 1, the figure is integrated with global iron resource information
database and financial capital. Global iron resource information database and financial capital are links to iron and steel industry and their upstream and downstream industries at home
and abroad, which is an integrated iron and steel group corporation, an “aircraft carrier” shown in Fig. 5. Notes: Inputs are shown in ovals and production processes in square boxes;
Dotted single-headed arrows denote iron losses or recycling from the system during product processing; Full double-headed arrows denote trade international and overseas deals of Fe
mass across the system boundary; Full single-headed arrows denote both flow direction of Fe mass and technology within the system boundary. They, meanwhile, stand for iron resource
information flow, business flow (product flow) and capital flow across or/and within the system boundary. Ming companies offer Fe mass flow (substance flow) and technology flow. IT
companies offer iron resource information flow base on big data. Business flow in circulation of commodities is characterized by demand driven supply chain. Financial services
companies offer capital flow.

financial flexibility. When there is a fluctuation in the market and the
economic situation is not stable, they could operate their company and
cooperate with their suppliers, financial services companies which offer
capital flows, and internet companies which offer iron resource
information flow base on big database (Fig. 5). In the long run, to
digest the overcapacity, we also should take into consideration chan-
ging the industrial structure based on extending iron and steel industry
supply chain, global iron and steel industrial chains, the supply-side
reform, together with the Belt and Road Initiative.
We can compare the performance of each strategy by modifying the
inputs and parameters in the fuzzy model. We found that changing
existing industrial structure had the most significant risk reduction in
Mainland China, based on the above iron cycle, supply chain, and
supplier’ risk evaluation. The second most effective measure is to
improve steel ratio of electric arc furnaces, reduce iron loss of tailings,
slags and scraps, recycle an amount of home scraps, old scraps and
imported steel scraps, and improve the recovery rate of scrap iron and
steel products. These also reveal that it is important for Chinese iron
and steel industry to shrink the milling and refining capacity, to
improve crude steel processing technology, and to enlarge the capacity
for domestic and imported waste management. As for these risks, these
results show that the suitable risk management strategy varies among
iron and steel industries according to Chinese industrial character-
istics, together with enhance the integration of international iron and
steel industrial strength. There is no doubt that integration of iron and
steel industry and internet industry, information industry, financial
industry, infrastructure and basic industry together with overseas
markets is the best strategic choice in today's economic development.
4.5. Scenario analysis
The SFA- and supply chain -integrated risk evaluation in our study
is suitable for screening-level risk assessment and management. With a
wide insight into China's iron and steel industries and upstream and
downstream industries, goals and strategies for risk management could
be quantitatively defined, although uncertainty exists. This approach
saves money and effort from large scale input and output monitoring.
Further dedicated surveys and risk assessments could be focused on

Fig. 5. Global iron and steel industrial chains customized risk management strategies. Notes: Cin and Cex are domestic and international financial services companies respectively; Gin-
Gex are government agency cooperation at home and abroad; IT and Database are internet and internet companies and their iron resource information database network respectively;
FM and Capital Market are a multi-level system of financial markets and their venture exploration capital market respectively. Pin and Pex are production processes of iron ore mining
and milling, pig iron smelting, crude steel refining at home and abroad respectively; Min and Mex, in turn, are fabrication and manufacturing at home and abroad respectively, Uin and U
ex, use or consumption at home and abroad respectively, Win and Wex, waste management and recycling at home and abroad respectively. Inputs are shown in square boxes; Full single-
headed arrows denote flow direction of capitals and services across or/and within the country; Full single-headed arrows with an enhanced thickness denote flow direction of Fe mass
within the country which in circulation of commodities is characterized by demand driven supply chain; Full double-headed arrows denote input and output of material or substance
flow, technology flow, information flow, business flow (product flow), capital flow and services across or/and within the country.

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J. Liu et al.
processes of potential iron circulation.
The supply risks may be underestimated because part of the iron
and steel stays in a stock or/and port or/and compartment stably. It
requires years or decades for the Fe content to truly reach equilibrium
with the other stock or/and port or/and compartments with which it is
in contact. However, the potentially increased future risk as a result of
past old capacity and excessive emission is noteworthy.
Estimation errors could arise from a number of assumptions in our
study. First, the estimation is based on iron cycle, supply chain,
evaluation index system, which assumes that the substance flow and
supply chain is similar for all facilities of the iron and steel industrial
process. However, process designs and controlling technologies do vary
at each facility. Another possible reason is the classification of
industrial sectors and materials. The accessible statistics regarding
iron and steel industries were based on a rough classification system
that accommodates various industrial processes. In other words, the
output of an industrial category includes not only iron -and steel
-related industries but also some industries that do not contribute to
outdated capacity and excessive emission. Second, the degree of mass
balance failure was not evaluated by the percent of loss for each
process. There are many reasons for mass balance failure– for example,
measurement errors that result in apparent substance losses. In iron
and steel industries, the quantity of materials and products is usually
measured by the ton which is such a large unit of measurement that
there is difficult in accuracy. Measurement errors are thus inevitable.
Other factors are uncontrolled emissions containing in all the process
that cannot be recovered, or the other waste and scrap lost in it in
terms of technological problems or business management (Fig. 1).
This approach is more suitable for the country that has a more
elaborate industrial statistic system. Because the substance flow net-
work and supply chain were used to characterize the common iron and
steel industries of a given category, the activities of the iron and steel-
producing industries may not increase as large magnitude as the
industrial category's increases. The estimation of the substance flow
network and supply chain does have a certain level of uncertainty. If
specific statistics with more detailed industrial classification become
available, this uncertainty can be almost eliminated. Even though the
error may deviate from the results of the risk evaluation, methodology
serves as a quick and convenient way to propose the suitable risk
management strategies. It is supposed that it is helpful to tackle the
long standing problems in global iron and steel industrial chains. These
strategies are worth additional refined risk evaluation to more exactly
characterize the problems and accurately determine the oversupply
risk.
5. Conclusions
We found that extending iron and steel supply chain would digest
the oversupply and reduce the excessive emission, the main problems
affecting on the steel ratio for electric arc furnaces were steel scrap
shortage and relatively high electrovalence, and Fe content of the social
stock basically resided in construction industry which significantly
influenced on the flow of steel products and steel and iron products.
More attention should be paid to the factors of export price, resource
allocation efficiency, financing capability and outdated capacity, strict
inspection and prevention should be taken to these risks. A compre-
hensive picture of several customized risk reduction strategies was
constructed for those problems. Of the strategies, China’ risks of iron
and steel industry could be reduced if the existing industrial structure
were adjusted on the basis of the substance flow networks and global
iron and steel industrial chains.
The SFA presented a comprehensive view of iron inflow and outflow
of the system boundary; by integrating SFA- and supply chain- and risk
assessment, the sources and pathways that contributed heavily to iron
substance inflow and outflow can be identified. Well-informed strate-
gies for risk reduction can then be developed based on the systemic
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Resources Policy 51 (2017) 272–282
evaluation. Modification of industrial activities, adjusting the industrial
structure could be used to effectively reduce supply risk after the level
of risk reduction is assessed for each strategy. Although uncertainty
exists in this large-scale estimation, the results highlighted the
problems of iron circulation and the Chinese iron and steel industries
of concern. Further strategies and effectiveness monitoring could be
focused on these problems and concern. This would save time and
expenditure in the process of implementing national iron and steel
industrial supply risk monitoring. Further implications of this study
could contribute to the design and management of global industrial
systems, in terms of the industrial economics that looks into the
interaction among industries for identifying solutions for total supply
risk management.
Acknowledgements
We would like to thank Resources Policy Editing and two anon-
ymous referees for their insightful comments. This work was partially
supported by China Geological Survey (Grant [2015] 05-03-05-019).
There are no competing financial interests.
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