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With severe air pollution expected to envelop large swathes of China this week and next, industries identified as major sources of pollution such as steel mills will likely come under close monitoring by local governments ready to slap emergency restrictions on production, steel sector sources warned Tuesday. But though stern official announcements and excited Chinese media reports have raised anxiety levels among affected enterprises up a few notches, steel market watchers counsel calm, maintaining that disruptions to production are unlikely to be any more severe than those the industry has already endured so far this winter.
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City government officials in North China’s Tangshan, the country’s major steel producing base, are celebrating its graduation in January from among China’s Top 20 cities with the worst atmospheric pollution, an achievement helped by the frequent cuts to steelmaking, sintering and coke production over the past few months, steel market sources said.
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Governments of Chinese provinces and cities are putting more emphasis on requiring enterprises to control emissions at times of heavy atmospheric pollution, formulating very detailed restrictive measures which heavy polluting industries including steelmakers are required to follow. The most recent, published by Changshu city in East China’s Jiangsu province on February 12, indicates such campaigns among local governments might be the new normal.
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Steel mills in Tangshan in North China’s Hebei province have yet assessed the situation and panned out how to adhere to the local authorities’ detailed requirements on curbing their sintering and blast furnace operations over April-September.
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The government of Tangshan city, China’s top steelmaking city in North China’s Hebei province, is considering prolonging curbs on local heavy industries including steel to the second and third quarters of 2019, according to a draft plan requiring internal feedback and seen recently by Mysteel.
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China’s central government is keeping pollution reduction a business priority for the nation’s steel industry this year, with the Ministry of Ecology and Environment (MEE) repeating its determination to persuade steelmakers to undertake upgrades of their works to achieve ‘ultra-low’ emissions – one of the three key measures the ministry aims to adopt this year to combat air pollution.
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Steel mills in Xuzhou city in East China’s Jiangsu province are resuming operations after being suspended for over half a month and in some cases, for over half a year, Mysteel has learned.
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Both steel demand and supply in Central China’s Henan province are expected to slacken further with the latest move by the provincial government to curb polluting industrial sectors including steel mills for four days since the late night of December 20 on the severe poor air quality forecast in the next few days, Mysteel understands from market sources on December 21.
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The most-traded May rebar contract on the Shanghai Futures Exchange closed higher for the third day as of December 21, up Yuan 53/tonne ($7.7/t) from Thursday’s closing price amid the better market sentiment in the short term with the frequent curbing efforts of late by the Tangshan government in North China’s Hebei province on its local steel industry, market sources said.
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China’s Ministry of Industry and Information Technology late Monday said it intends to remove the names of eleven makers of stainless and carbon steel from its list of qualified domestic producers for 2018, nearly half the number of enterprises disqualified by the ministry for 2017 – a reduction which buoyed Chinese steel industry observers.
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East China’s Jiangsu province, the second largest steel production base in the country, has imposed a short-term curbing on polluting industries including steel, coking, and non-ferrous smelting starting November 27 on the forecast of extremely poor air quality in the next few days, though steel mills, many already on the winter restriction scheme since the beginning of November, have not felt much affection so far.
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Steel mills in North China has lost the appetite to ship their extra rebar supplies to East China as price gap between the two regions are closing up with domestic steel price declines since early November, market sources shared on November 23.
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The city government of North China’s Tangshan has issued another emergency alert curtailing the sintering operations of local steelmakers during November 22-27 out of concerns for a spike in air pollution during the five days. But local producers have just shrugged.
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The start of production restrictions for winter among Chinese steelmakers and their raw materials processors has revealed a vast difference in approach to the issue among steelmakers and local authorities in the country’s two largest steelmaking centres, Tangshan and Handan in North China’s Hebei province. But for the 200-odd steelmakers and merchant coke producers the cities host, the differences in policy execution by their city governments may be rendered irrelevant by nature if this week’s pollution alert emergency becomes a worrying regularity.
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The city government of Tangshan in North China’s Hebei has finalized the degree to which steelmakers in the city are to reduce production during the winter restrictions period, market respondents confirmed Tuesday. Given the city’s prominence as the supplier of the most steel in the world’s largest steel producing country, Tangshan’s advisory should be a crucial indicator of how China’s steel sector will manage this season’s production cuts. Unfortunately, it is not.
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China’s Jiangsu Shagang Group, located in Zhangjiagang northwest of Shanghai, has decided to deepen its cuts to upstream production during this week’s China International Import Expo (CIIE) to help improve air quality over the city for the event, market sources have confirmed.
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The production restrictions at Chinese steel mills starting November could be beneficial to the stable development of the country’s steel market, according to Chi Jingdong, vice chairman of China Iron & Steel Association (CISA).
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More evidence is emerging of the Chinese central government’s determination to ensure no compromise on its drive for clearer skies over urban centres this winter but at the same time individual enterprises including steel producers have been treated fairly with no more “one for all” simplified moves by the local authorities.
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The growth in Chinese steelmakers’ profits decelerated in the third quarter of 2018 even though that for the first nine months surpassed the average level of the country’s industrial sector, mainly as steelmaking raw material prices including iron ore, coke, scrap and ferroalloys caught up in speed, market sources agreed.
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Tangshan’s steelmakers in North China’s Hebei province were informed by city authorities on October 31 that new emergency production restrictions were being placed on their sintering plants over October 31-November 5, as the China Meteorological Administration had warned that weather patterns indicate smog will likely hang in the atmosphere rather than dissipate during the period.
