Tangshan Extends Highest-Level Smog Alert till Indefinite Period

Hebei's largest steel producing city Tangshan has extended a level 1 smog alert that was due to be lifted on Wednesday (6 March 2019) and the new date for the alert to be lifted has not been mentioned by the notice issued on the government website. The key reason cited for extension of alert is persistence of unfavorable weather conditions.

The level 1 alert, the highest in China's four-tier pollution warning system, has been in place since 1 Mar'19 and will now continue beyond the stipulated expiry of 8 pm on 6 Mar'19, according to a notice on the city government website.

Under the alert, steel mills are required to curb output by 40-70% or even stop production, depending on the scale of their emissions; other industries are also affected.

Being the largest steelmaking city of Hebei province, Tangshan has around 116 MnT of steel capacity or 11% of the country's total steel manufacturing capacity. In its war against smog and rising pollution the city has been announcing continuous production cuts since the start of winter heating season in Oct'18. The heating season in China will be in place till Mar'19.

How much capacity cuts happened in 2018?

According to the market reports, China has exceeded its crude steel capacity reduction target for 2018 by around 17% by eliminating 35 MnT capacity last year against a target of 30 MnT.

China had earlier indicated it may opt for a steel capacity reduction target of around 20 million tonne for 2019, although it had achieved its 13th five-year economic plan, 2016-20 steel capacity reduction target of 150 MnT in 2018 itself. But with most redundant capacity already eliminated, China may focus on capacity replacement projects, mergers and acquisitions of smaller mills and shutdowns of chronically loss-making zombie mills over the next few years to bring its steel sector in line with its capacity and emissions control objectives.