Second fire at Cangzhou Zhongtie fuels HRC supply fears
Source: Mysteel
Dec 20, 2018 19:10
Earlier this month in the early evening of December 5, the mill’s aerial cable caught fire, according to a post from China’s official media CCTV news on December 6. Neither that fire nor the second on Wednesday resulted in injuries but the cause remains unclear, according to the sources.
“It is a complete power blackout across the whole company,” a source based in Beijing, also in Hebei province, said. “It remains to be seen when they (Cangzhou Zhongtie) can return to operations. Probably only next month, can their blast furnace produce molten iron as normal,” she remarked. Mysteel’s many phone calls to Cangzhou Zhongtie Thursday went dead after the first ring, suggesting the power outage was seriously affecting communication.
The incidents and suspension of production at this major HRC producer in North China have fuelled concerns that HRC supply in North China could now be under pressure, according to the Beijing source. Cangzhou Zhongtie is capable of producing 22,000 tonnes/day of HRC, Mysteel understands.
Even before the suspension of production at the Cangzhou mill, such fears were given voice by traders and end users from the start of this month when news emerged that many Chinese HRC producers were planning maintenance stoppages or other production suspensions, Mysteel notes.
Just this week, state-owned Echeng Steel in Central China’s Hubei province, under China’s biggest steelmaker Baowu Group, announced on December 19 that it would halt its hot strip mill for nine days for maintenance over December 26-January 3.
On December 20, Tangshan Guofeng Iron & Steel in Hebei, declared that it would no longer supply HRC to its downstream users and instead would use its limited feedstocks to make sure its own cold-rolled coil production continues smoothly. Tangshan Guofeng took the step in response to enhanced environmental restrictions in Tangshan city starting December 19, as Mysteel reported.
Notably, Mysteel’s 4.75mm HRC benchmark price in Beijing rose by a marked Yuan 80/tonne ($11.6/t) over the past two days and by Yuan 210/t from the end of November to Yuan 3,680/t including the 16% VAT as of December 20. The pickup in HRC prices further narrowed the price gap between HRC and the corresponding HRB 400 20mm dia rebar price to Yuan -30/t from a high of Yuan -120/t at the end of November.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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