Feature: Tangshan tables output cut ratios for its mills
A document from the city, dated November 3 and seen by Mysteel, is circulating among Tangshan’s steelmakers but to date, nothing has been posted on the city government’s official website. The document also skips over many details. Tangshan hosts 116 million tonnes/year of crude steel capacity, with its total output last year reaching 91.2 million tonnes, contributing 11% to China’s total steel production, Mysteel notes.
As expected, the city has assigned local steelmakers to various reduction categories from A-D, with those mills in A category being free of all production restrictions during the winter season, while those in B category must clip output by an average of 39.3%, some 53% for C category makers and 60% for those assigned category D, according to the document.
The notice shows that Tangshan has kept its promise, that those producers meeting the government’s specific standards regarding emission levels and investment in environmentally-friendly facilities would be able to avoid production cuts. It presented that two steelmakers, Hebei Jinxi Steel Group and Tangshan Ganglu Iron & Steel Co, would enjoy special treatments.
The document also indicated the size of the reduction would be lessened – by 15% – for other makers located in ‘environmentally-sensitive’ regions in Tangshan but which have expressed a determination to relocate. But again, details were scant.
“The government didn’t reveal the actual names of steelmakers which can enjoy the preferential policy,” a Hebei-based industry source explained. An official with another mill in the city (assigned category B) said his mill had already decided to move out of the urban area but he said he had no idea whether the mill’s address would be included among the sensitive areas the government had identified and whether as a result, it might be rewarded. He declined to disclose his mill’s actual cuts ratio for this winter.
The notice said that the reduction in ‘operative capacity’ for blast furnaces in Tangshan this season is 18.59 million tonnes/year. This, the document said, was calculated based on (an average) 31.6% reduction ratio of the total of 139 blast furnaces operated by 35 steelmakers in the city. Last year, the ‘operative capacity’ affected was 18.21 million t/y, Mysteel notes.
The document did not calculate what this annual capacity reduction would translate to, in terms of molten iron output lost over the expected 4.5 months the curbs are likely to be in place. “In figures, Tangshan may have more molten iron available than what we expected, as the average reduction ratio seems to be lower than what we’d thought from (the city’s) earlier draft ratios,” a Shanghai-based market watcher estimated.
Other serious questions remain, including the actual date for the implementation of the city’s capacity curtailments, Mysteel notes.
“We are expecting to have to implement the curbs beginning from November 15 – as we did last year – but we are yet to receive official orders,” a second Tangshan-based industry source told Mysteel. In an earlier draft released on September 17, Tangshan city had indicated that this round of winter season production cuts would take effect from October 1 but the implementation has clearly been delayed.
The lack of clarity on the city’s intension seems to be causing market unease. The bellwether price of Chinese steel, the Q235 billet price in Tangshan, continued weakening on November 6, losing Yuan 40/tonne ($5.8/t) on day to Yuan 3,850/t EXW and including the 16% VAT. Market watchers blamed the city’s final capacity cut details saying the reductions failed to meet market expectations and so dampened sentiment as the production curbs were lenient than last year’s 40%-50%, they said.
Written by Venus Wang, wangyi@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
Table: Details of Tangshan capacity restrictions
Categories of mills |
Mills per category |
Reduction ratio range |
Average cut per category |
A |
1 |
0 |
0 |
B |
22 |
23.68%-48.34% |
39.3% |
C |
9 |
49.30%-56.07% |
53% |
D |
3 |
56.33%-69.40% |
60% |
Baowu starts building hydrogen-based shaft furnace
Feb 17, 2022 16:15
Kobe Steel announces start of Algeria Midrex DRI plant
Apr 15, 2021 15:30
Nippon Steel eyes large EAF to cut carbon footprint
Mar 31, 2021 16:30
Japan’s NSE to supply large CDQ to Taiwan’s CSC
Nov 27, 2020 15:30
MIIT to remove 11 steelmakers from qualified list
Dec 19, 2018 20:00