Two Chinese Cities of Hebei Province Set to Observe 50% Production Cuts during Winter Heating Season

As a part of anti-pollution campaign, this year China has allowed its 28 cities government to set their own industrial output limits in the autumn-winter heating season discarding last year's blanket 50% steel output cut across these cities resulting which each city is setting up its own production cuts targets for the upcoming winters.

Handan to observe 40-50% production cuts in two phases

According to the latest reports, Handan, which is China's one of the largest steel-producing cities in Hebei province, has proposed a 45-50% blast furnace output cut during the November-March winter heating season. At present, the city is enforcing 20-30% output cuts.

The city has issued an official document proposing autumn-winter output cut for various industries to start on 1 Nov'18 instead of 1 Oct'18, which had been officially declared as the start of the autumn-winter output restriction season this year.

Handan will evaluate air quality during 1-14 Nov'18 and the output restrictions will be rolled out only if the air quality is bad enough to warrant such cuts. If the air quality is good, the city may continue with existing restrictions on various steel mills that were not specified. The air quality will be again assessed during 1-15 Mar'19 to determine if output cuts need to be extended beyond 31 Mar'19.

Handan is proposing a 42% blast furnace output cut during 1 Nov-31 Dec'18 period and a 51.2% output cut during 1 Jan-31 Mar'18. Operational pig iron capacity in the first phase is expected to be around 8.64 MnT and 12.75 MnT in the second phase, said the Handan government.

The city's government did not mention output cuts for iron ore sintering plants, but these are likely to be in line with pig iron output cuts for each mill. Handan is splitting up the mills into three categories A, B and C depending on emissions intensity with lower output cuts for compliant mills. It also laid out the proposed output cuts for 18 mills in the city.

Handan's largest steel producer Hesteel, with a total capacity in the city of over 10 MnT per annum, will be allowed to operate at 79% of capacity over 1 Nov-31 Dec'18 and 69% capacity from 1 Jan-31 Mar'18. Hebei Yongyang Special Steel Group will be allowed to operate at 71% capacity in the first phase and 61% of capacity in the second phase.

The heaviest cut would be imposed on Huarui Casting Pipe at 35.5% allowed capacity for phase one and 30.5% for phase two. While Tianjin Tiantie Metallurgical Group will not be allowed to operate its Handan plant at all during November-March.

Guye district of Tangshan city in Hebei province orders 50% output cuts

Tangshan, another key-steel producing city of Hebei province has also enforced production cuts, starting 1 Oct'18, by dividing the city's mills into four categories based on emissions intensity and imposing 0-70% production cuts over 1 Oct 2018 to 31 Mar 2019.

Guye district of Tangshan city which is a steelmaking hub in Northern China have also ordered to observe 50% production cuts during the winter heating season.

According to the official document released from the district's government, the local steel mills will be required to implement the cut between 11 Oct -14 Nov'18 - which is around a month before the winter heating season. Previously only 21.7% of Tangshan's local steel production was restricted in winter, "which is not enough by far to help curb air pollution," the government said in the document. The city must start the winter production cut before the heating season because some of the steel mills need to be operational during this period because they are the main heating providers.

The city of Tangshan will continue to cut production after the heating season for half a month if the 50% production cut target is not met, it said. The Guye district has three major mills with a combined total capacity of 7.2 million tonnes per year of steel, which accounts for 5% of Tangshan's total steel capacity.