Tangshan tightens curbs, mills unsurprised
Steelmakers in Tangshan city in North China’s Hebei province, already weighed down by production constraints in force during July 20 to August 31, have been ordered to implement stricter curbs to 50% of operative capacity of their sintering, shaft furnace and lime kiln facilities during August 1-5, a Tangshan-based industry source confirmed on August 1. From August 6 onwards, the mills will revert to the level of reductions proscribed in the current schedule.
This new round of short-term reductions to cope with spikes in air pollution is the third the Tangshan government has introduced since July 20, following the emergency restrictions on all sintering and shaft furnace operators mandated for July 22-27 and July 27-31, Mysteel notes.
“Being asked to trim 50% of capacity this time is less of a surprise than being told to shut all the sintering and shaft furnace facilities as was the case in the early days,” an official from a Tangshan-based mill said. “The local government is showing its determination to handle air pollution problems but in a way that is reasonable and more acceptable to steelmakers.”
The Tangshan government’s strategy of demanding additional short-term reductions in the context of a long-duration cutback is seen as more efficient for the government to realize the actual implementation of the constraints. “When production cuts are supposed to be in place for a long time, some mills may be unwilling to always strictly obey the directive. But now, with the duration of the constraints reduced to several days per round, the cuts will be more rigorously observed by producers,” the industry source explained.
Throughout all of July, the Tangshan government had issued no fewer than eight notices of emergent short-duration stoppages to ease toxic smog over the city, with steelmakers always on the list of enterprises required to stop or curb operations, Mysteel notes.
As a result, steel prices were pushed higher in anticipation of supply shortages in Tangshan, China’s crucial steel production base. The daily price of Q235 billet in the city, a major product for Tangshan, was pushed to a 7-month record of Yuan 3,840/t EXW and including 16% VAT as of August 1, according to Mysteel database.
Tangshan hosts the most steel capacity in Hebei province, with the latter being China’s top steel production base with 240 million tonnes/year steel capacity, or one quarter of the country’s total.
Written by Venus Wang, wangyi@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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