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Tangshan drafts restriction plans for mills for August

The city government in Tangshan, China’s largest steel production base in North China’s Hebei province, is reviewing a draft plan of renewed production restrictions suggested for heavy industries in the city to reduce air pollution in August, with the steel sector remaining a key target.

The draft plan, dated July 28 and seen by Mysteel Global, was drawn up by Tangshan’s Municipal Ecology and Environment Bureau and submitted to the city government for its final approval. If okayed by the city authorities – and this seems likely – the curbs could reduce molten iron production by 76,500 tonnes/day, Mysteel calculates.

The restrictions on both steel mills’ sintering and ironmaking capacities are eased over August 1-31, compared with those placed on steelmakers in July, Mysteel Global noted.

For the 33 integrated mills listed in the plan, 16 are asked to curb their operative sintering capacity by 20%, including Shougang Qian'an Iron & Steel Co, the only steel producer in Tangshan that was exempted from production curbs last winter due to its outstanding environmental protection performance. On the other hand, one mill – Tangshan Iron & Steel Co, the production base in the city for China’s second largest steel producer, Hebei Iron & Steel Group – is to cut its sintering operations by a large 40%, the draft recommends.

Restrictions of 50% and 30% will be imposed on another 14 steel companies’ sintering machines and blast furnaces respectively, with the remaining three mills asked to trim both their sintering and ironmaking capacities by 50%, according to the draft plan.

“Steel producers in Tangshan have been observing severe restrictions in July, (and) they should be given some room to take a breath,” a market watcher based in Shanghai commented.

In July, ten of these 33 producers had generally been implementing 20% curbs on both sinter machines and blast furnaces, whereas the others had been curbing these facilities by 50% – with the restrictions toughened to 100% over July 26-28, as Mysteel Global reported.

Though the proposed restrictions could cut molten iron production among the 33 mills by 76,500 tonnes/day, this will still be a large 90,000 t/d less than the average for all July, Mysteel estimates, and lower by a more significant 210,200 t/d from the output reduction over July 26-28.  

The capacity utilization rate of the 138 blast furnaces which Tangshan-based steelmakers host is expected to return to around 76%, up 10% from the current level, Mysteel predicts.  

Tangshan steel re-rollers, on the other hand, will still be divided to two groups, according to the draft, and take turns to suspend their production as they did in July, with each idling their production for half a month.

On Tuesday, the likelihood of Tangshan city easing its production restrictions during the coming month intensified market concerns on steel supply increasing when demand remains dull amid the hot and rainy summer weather, Mysteel Global noted.

The most traded rebar October contract on Shanghai Futures Exchange closed the day trading session on July 30 at Yuan 3,886/tonne ($564.3/t), down Yuan 21/t or 0.5% on day. The October contract for hot rolled coil also declined a similar Yuan 34/t or 0.9% on day to Yuan 3,785/t.

Written by Olivia Zhang, zhangwd@mysteel.com

Edited by Russ McCulloch, russ.mcculloch@mysteel.com