China's Tangshan tables new curbs on mills to March
The restriction plans for the winter "heating season" begun last November have been imposed on steel producers located in "environmentally-sensitive" areas - largely in North China including Tangshan - as measures to reduce air pollution in winter. On January 18, the Tangshan city government published a new, updated version incorporating adjustments to the original plan.
In the updated plan, the general principle remains that local steel producers are required to cut crude steel output by 30% on year over January 1-March 15, Mysteel Global noted. Steelmakers and re-rollers in Tangshan city are still being asked to observe various curbs on their operations, with the severity continuing to be determined by their performance regarding environmental protection. Mills ranked "A" and adjudged well-advanced in installing pollution control systems are free from any mandatory restrictions, as reported.
The plan announced on Tuesday mandates some more severe curtailment. It states that those local steel mills where central government inspectors last year uncovered misconduct or irregularities in these steelmakers' environmental protection or capacity reduction activities are required to curb their operations by a further 5%.
Similarly, steelmakers whose capacity utilization rate during January-September 2021 averaged more than 120% will also be required to cut their production by an additional 5% till March 15.
Moreover, steel mills not listed by the Ministry of Industry and Information Technology as licensed steel producers will also need to raise their production restriction ratio by 5%.
After spelling out other minor adjustments, the plan concluded with details of the restrictions imposed on all 24 steel producers in Tangshan ranked from 'B' through until 'D', setting out which of their production facilities need to be idled and over which time period, Mysteel Global noted.
Such restrictions will result in crude steel output among Tangshan's local steel producers declining by 8.9 million tonnes on year over January-March, according to the document.
Steelmakers and re-rollers in the city have long become accustomed to various forms of restrictions, Mysteel Global notes, either during the winter "heating season" as now, or on those occasions when weather conditions conspire to prevent atmospheric pollution from dissipating - which in winter is quite frequently. Tangshan remains one of China's most polluted cities.
The new restriction plans were announced less than three weeks after local steel producers took a breath following the lifting of a previous round of curbs on January 1. These limits too had been introduced to combat poor air quality. By January 18, the capacity utilization rate of 104 blast furnaces Mysteel regularly surveys in Tangshan had recovered to 77.8% after staying between 56.4%-68.4% in December, according to Mysteel's latest survey.
Mysteel estimated that the new restrictions will slash capacity utilization of the 104 blast furnaces back to 63%.
"This is not a surprise, given that with the upcoming Winter Olympic Games, the local government has to make some efforts to reduce pollution," a Shanghai-based steel analyst commented. The Winter Olympics will be held during February 4-20 in Hebei province's Zhangjiakou and in Beijing, both close to Tangshan.
However, the Shanghai analyst believed that the curbs on Tangshan steel producers proposed under the new plan are unlikely to be as harsh as those enforced during October-December last year.
Due to the frequent, tough production restrictions Tangshan imposed last year, the city is seen as having made the largest contribution to Beijing's scheme to lower the country's steel output in 2021.
Tangshan city government had announced operational restrictions on enterprises under its jurisdiction on no fewer than 58 occasions last year, according to Mysteel tracking. The city's blast furnace steelmakers produced 110.9 million tonnes of molten pig iron during last calendar year, lower by 23.8 million tonnes on year, according to Mysteel's calculation. This accounted for 58.4% of the total reduction of molten iron output nationwide in 2021.
Written by Olivia Zhang, zhangwd@mysteel.com and Victoria Zou, zyongjia@mysteel.com
Edited by Zhenqi Yang, yangzhenqi@mysteel.com
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