Tangshan steel mills prepared for harsher curbs for 2021
A local steel analyst has already detected the greater resolution of the city in pollution control this year and a few changes have been spotted.
“More experienced professionals have been engaged in formulating the restrictive measures and the regular check points have been added into the list,” he observed, noting that the city has expanded its air quality checkpoints to 19 in 2021 from 15 last year.
MEE has also increased the locations in Tangshan under its real-time air quality monitoring to ten this year from six in 2020.
All the step-up in regulation may lead to lower steel output and less iron ore demand from the mills in Tangshan and probably elsewhere in Hebei, the country’s top steelmaking province, according to the market sources in and out of China, which has added uncertainties to the steel and raw material prices in China and both iron ore and rebar prices have been fluctuating.
As of March 12, Mysteel’s PORTDEX 62% Fe Australian Iron Ore Fines index in Qingdao stood at Yuan 1,138/wmt ($175/wmt) FOT and including the 13% VAT, down Yuan 55/wmt from the end of February. Meanwhile, the HRB400 20mm dia rebar price, increased Yuan 50/t over the same period to Yuan 4,738/t including the VAT.
The status quo of Tangshan’s pollution
Tangshan in North China’s Hebei province is home to 30 steel producers, and it has long been under the central government’s close watch over its air quality partly due to its geographic proximity to the capital.
Recently, the pressure is building up, as its efforts in the past few years have failed to remove its name from the most polluted cities, though the number of the cities in Hebei at the “bottom ten” of the 168 reduced to four by 2020 from seven in 2016 including Shijiazhuang (167), Tangshan (165), Handan (164) and Xingtai (161), according to the official release from China’s Ministry of Ecology and Environment (MEE).
In February, Tangshan was ranked the 167 among 168 according to the air quality, according to MEE’s latest monthly release on March 16, and its ranking for January-February, thus, fell to 152 from 106 from January.
Tangshan’s air quality ranking in 2020-2021
Source: MEE
All the possible intensified curtailing efforts must have to do with the disheartening results Tangshan has achieved despite the fact that since the start of 2021 the local authority has imposed five rounds of curbing on local polluting industries to reduce emission of pollutants on poor air quality forecast. It has also issued a dozen of measures to intensify the local pollution control, according to Mysteel’s tracking.
The closer scrutiny by Tangshan and MEE may also have to do with the latest findings by MEE that some local steel mills had ignored the local curbing requests when an inspection team led by Huang Runqiu, the head of MEE, conducted an ambush check on March 11, discovering that four local steel mills had been operating as per normal despite the ongoing restrictions, as Mysteel Global reported.
The latest misconduct and on-site inspection resulted in the downgrading of 11 steel mills in Tangshan in their environmental protection performances.
“Air pollution battle is hard and long, and the latest round of restriction is a clear message from the governing bodies of their determination to persist and intensify the efforts. Most probably, such curbs will only be more frequent and harsher,” the Tangshan analyst said.
The rest of the H1 will be crucial for Tangshan to remove itself from the list of the ten most polluted cities, or it will be too late for the city government to do much to accomplish the mission, he added.
The targets in the battle against air pollution
The Chinese authorities, however, will no longer directly target blast furnaces when imposing curbing, unlike in 2017, the first year with winter restriction, as they have come to realize that coking and sintering are the sources of pollution, though curtailing efforts on these two will lead to lower capacity utilization rates among the blast furnaces, market sources agreed.
Tangshan blast furnace capacity utilization rate over 2020-2021 (Unit: %)
Source: Mysteel
The latest emergency restriction in early March, thus, saw the capacity utilization rate of 126 blast furnaces in Tangshan, fell from 76.1% at the end of February to 70.9% over March 5-11, hitting a one-year low or back the level when China’s steel demand was impacted severely by the COVID-19, according to Mysteel’s survey.
Re-rollers, as the end-users of the semi-finished steel, however, may be under consistent scrutiny too to discourage higher steel output from the Tangshan steel mills, Mysteel Global understands.
Fengrun district in Tangshan is the most polluted region, hosting two of the 30 integrated mills in Tangshan and over 80% of the steel re-rollers of the city, and the re-rollers have been under constant production bans since the beginning of the year, as Mysteel Global reported.
Written by Olivia Zhang, zhangwd@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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