Only Slight Impact on North and East China Mills From New Curbs

Steelmakers in Hebei in North China and Shandong in East China could be having a slightly quieter new year than they might have expected, Mysteel Global notes, though new rounds of emergency production curbs may have less impact on steel mills' production than previous rounds.

Over the past several days, local authorities in both provinces have issued 'orange' alerts for air quality due to pollution - the second in severity to a 'red' alert - with all related emergency measures including curbs on local steelmakers' operations mandated from 2 Jan'20, Mysteel Global noted from the notices released on related provincial or city official websites.

Shandong anticipates being able to downgrade its alert from 6 Jan'20 and Hebei from 7 Jan'20, Mysteel Global notes. In parallel, cities such as Tangshan and Cangzhou in Hebei, as well as Jinan and Zibo in Shandong, have issued their own air pollution alerts.

Nevertheless, this round of emergency production curbs may not affect steel production as much as previous restraint directives.

Taking Tangshan as an example, the notice released by the local government of this the most important steelmaking hub in North China, merely required local steel mills to apply output constraints according to the requirements listed in the detailed document that Tangshan had previously distributed among all polluting industries.

"Most steel mills may just need to continue observing their previous normal curbs - in line with the city's monthly air pollution control plan - which means there will be fewer additional cuts to their production," a Tangshan-based market source close to local steelmakers commented.

According to the air pollution control plan newly released for Tangshan for Jan, among the 32 steel mills in Tangshan, one classified "A" and two under the "B" can operate free from any curbs. The remaining 29 in the category "C" are subject to individualized restrictions listed in the detailed document.

In that lengthy document, the city government had painstakingly spelt out what facilities are to be restricted to what degree in accordance with the severity of the local air pollution, Mysteel Global noted. Steel mills' logistics are also subject to curtailment.

During the most recent round of emergency production cuts over 22-26 Dec, steelmakers ranked by the city in categories B and C (for their emission control facilities) and which are not part of programs harnessing their process off-gases for municipal heating, were asked to halt their lime kilns, pelletizing and sintering machines. Category C mills were also asked to cut blast furnace operations by more than 50%, as Mysteel Global reported.

A Shanghai-based market insider close to steel mills in Shandong also confirmed that currently, steel production likely to be affected by this round of curbs might be limited. So far, just some small-scale mills are involved and local mills are already well used to such kind of restrictions, especially on their sintering operations, he explained.

On Jan 1, a five-day air-quality forecast posted on the website of China's Ministry of Ecology and Environment warned that emerging weather patterns suggested many areas in the Beijing-Tianjin-Hebei region, Shanxi in North China and Shandong would experience light to heavy atmospheric pollution over the next five days, Mysteel Global noted.

The article has been published under article exchange agreement between Mysteel Global and SteelMint.