In an effort to cut energy consumption, China is moving to further tighten regulations over the high energy-dependent ferroalloy industry.

The country's top policymaker, the National Development and Reform Commission (NDRC), on Tuesday issued a circular implementing a regulation outlined last December that specified standards for China's producers of ferroalloy, a metal product commonly used as a raw material in steelmaking.

The new circular requires the country's ferroalloy producers to submit company information about their total capital, profits, production facilities, energy consumption and environmental protection.

This has to be handed over to regional development and reform commissions, who will assess individual producers according to industrial standards published last year.

The NDRC will review the information submitted by ferroalloy companies, and will announce the first batch of producers who meet national standards by the end of the year, the policymaker said yesterday on its website.

The NDRC-led industrial inspection is a "long-term task," which will be conducted on a "timely basis," said the circular.

For those who do not reach NDRC standards, they will be given a year to improve and upgrade their facilities and operations. If they then fail to meet standards they will be forced to shut down.

New investments in the ferroalloy industry will not be allowed unless a firm achieves the government's standards, the circular added.

The move is in line with the government's blueprint to rein in over-investment in some high energy-guzzling sectors, such as coke and ferroalloy production, which is forecast to suffer from a market oversupply. This will have a far-reaching influence on the sector in the long term, according to industry analysts.

Due to disordered market regulations, low-level overlapping investment in the ferroalloy sector has resulted in a fragmented industrial structure, severe environmental pollution and an imbalance between market demand and production capacity.

Industry sources say China consumed some 6.1 million tons of ferroalloy products last year, while domestic production amounted to 8 million tons.

"The government's tightened control is expected to put a number of small-sized producers at imminent risk of closure," said Wu Pengfei, an industry analyst with Beijing-based Guotai Jun'an Securities.

However, a senior expert from the China Ferroalloy Industry Association (CFIA), argues the move will probably not lead to a shut down of most ferroalloy producers as it will take a long time for local government departments and individual companies to carry out inspections.

Li Xinchuang, vice-president of the China Metallurgical Industry Planning & Research Institute, agreed with the CFIA expert, saying in some poor areas in Shaanxi and Ningxia, which are rich in natural resources, ferroalloy production might be their only major industry.