Analysis of production cuts in winter season 2018-2019

Telah Terbit: Aug 3, 2018 19:37
Chinese authorities are mulling details of production cuts in the ferrous and non-ferrous industries

SHANGHAI, Aug 3 (SMM) – Chinese authorities are mulling details of production cuts in the ferrous and non-ferrous industry across the smog-prone Beijing-Tianjin-Hebei region and nearby areas, during the upcoming winter season, SMM learned from market talk this week. The cuts are part of an effort to reduce smog and improve air quality, and are stricter than cuts last winter.

Compared to last year, SMM finds major differences as follows:

Steel mills across six key cities, Tianjin, Shijiazhuang, Tangshan, Handan, Xingtai and Anyang, will be required to cut capacity by half during the heating season from November 15, 2018 to March 15, 2019. Tianjin and Xingtai are new additions to the list this year. Mills in the remaining cities in the region will need to shut no less than 30%.

Cuts are determined from the designed capacity of blast furnaces. Captive facilities including sintering machines and coke ovens will also undertake cuts or suspensions, which were not required in the previous year’s plan.

This year's plan will allow mills with pollutant emissions, across production and transportation processes, that meet the ultra-low standards to be free from the staggered production model, though SMM believes that only two mills meet these standards currently. A cut of 50% would be still imposed on these mills when pollution exceeds the orange-alert level.

Coking duration at all coke plants across the regions will be required to be extended beyond 36 hours during that period. Plants can avoid staggered production if their coke ovens have a hood, if they have installed desulphurisation and denitrification facilities and the emissions are lower than the ultra-low standards.

Casting and smelting facilities in the casting industry will be suspended. This excludes natural gas furnaces and electric furnaces with emissions that meet the targets. Such suspension can be exempted if a plant obtains approval from the local government. Natural gas furnaces and electric furnaces should still cease operation if pollution exceeds the yellow-alert level.

In terms of the impact to demand-side issues such as trucking restrictions, the latest proposal for this year looks slightly harsher than last winter for restrictions on days of heavy pollution, though outside of the heavily polluted days the number of exemptions for industries which meet certain standards, namely their power source and emissions, appears to be greater than last year. The policies aim for a 5% improvement in PM2.5 levels and a 5% reduction of the number of heavily polluted days. This suggests that demand restrictions will have to be as strict as last year, or greater. 

Details:

Action Plan on Comprehensive Control for Autumn and Winter Air Pollution in Beijing-Tianjin-Hebei and Nearby Areas

 

2017

2018

 

Date

October 1, 2017 – March 31, 2018

October 1, 2018 – March 31, 2019

Note

Days

182

182

 

Geographic coverage

Beijing, Tianjin, and 26 cities in Hebei, Shanxi, Shandong, and Henan provinces including Shijiazhuang, Tangshan, Langfang, Baoding, etc.

Beijing, Tianjin, and 26 cities in Hebei, Shanxi, Shandong, and Henan provinces including Shijiazhuang, Tangshan, Langfang, Baoding, etc.

 

Basis

Thoroughly rectify heavy pollutant companies, reduce their emissions and use of coal, highlight staggered production plans, and strengthen governmental supervision to address heavy air pollution.

 

With the industry structure, energy, transport, and land as a foundation, promote clean energy and rectification of heavy pollutant companies, overhaul bulk freight transport from road to rail, highlight remediation on diesel trucks, industrial furnaces and emission of volatile organic compounds (VOCs), and strengthen governmental supervision to address heavy air pollution.

 

Targets

  • In targeted cities, average concentration of particulate matter with a diameter below 2.5 micrometres (PM2.5) will be reduced by 15% on the year.
  • The number of heavy-pollution days will be reduced by more than 15% on the year.
  • In targeted cities, average concentration of PM2.5 particulate matter will be reduced by 5% on the year.
  • The number of heavy-pollution days will be reduced by 5% on the year.

 

 

Steel industry

  • Implement a classified management system based on each plant’s emissions, and impose staggered production by the end of September 2017.
  • Steel mills in key cities such as Shijiazhuang, Tangshan, Handan, and Anyang are required to cut steel production by 50% in the heating season. The cut is based on actual production of their blast furnaces.
  • Cuts are checked through the actual power usage at plants.

 

  • Steel mills in key cities such as Tianjin, Shijiazhuang, Tangshan, Handan, Xingtai, and Anyang are required to cut steel production by 50% in the heating season.
  • Cuts for other targeted cities should be 30% or more.
  • Production of supporting sintering machines and coke ovens will also be cut accordingly.
  • Plants whose overall operations meet the ultra-low emission standards are exempt from staggered production.
  • Plants whose production meets part of the ultra-low standards will face staggered production.
  • All plants are required to cut production by 50% during heavy pollution.

 

Coking industry

  • Coking duration at coke plants in urban areas are required to be extended beyond 48 hours, and that of plants in other areas should be extended to over 36 hours.

 

  • Coking duration across all coke plants are required to be extended beyond 36 hours.
  • Coke plants with desulphurisation and denitrification facilities and emissions that meet standards are exempt from staggered production.

 

Casting industry

  • Except for electric furnaces and natural gas furnaces that meet emission standards, all other facilities are required to suspend in the heating season. In special cases, production only starts with approval from the municipal government.
  • Production of all electric furnaces and natural gas furnaces should be suspended during heavy pollution.

 

  • Except for electric furnaces and natural gas furnaces that meet emission standards, all the other casting and smelting facilities (including blast furnaces for pig iron casting) are required to suspend in the heating season. In special cases, production only starts with approval from the municipal government.
  • Production of all electric furnaces and natural gas furnaces should be suspended during heavy pollution.

 

Building materials industry

  • Increase the proportion of staggered cuts.
  • Full suspension is imposed across industries of cement, brick kiln, ceramics, glass wool, rock wool, and plaster tablet in the heating season.
  • Cement grinding plants are required to suspend in heavy pollution.

 

  • Increase the proportion of staggered cuts.
  • Except for plants in the list for staggered production (see column on the right), full suspension is imposed across industries of cement (excluding grinding plants), brick, ceramic, glass wool, rock wool, mineral wool, waterproof building materials, and plaster tablet in the heating season.
  • Glass plants are required to cut production in heavy pollution.
  • 2018: Little or no cuts are imposed on plants powered by natural gas, electricity, or power plant thermodynamic system.
  • This includes industries of casting, ceramic, brick, glass wool, plaster tablet, waterproof building materials, rock wool, and mineral wool.
  • For plants listed in the Industrial Structure Adjustment Guideline, there will be a greater cut or suspension.

 

Nonferrous metals and chemicals sector

  • Primary aluminium producers cut production by over 30%.
  • Alumina producers cut production by 30%.
  • Carbon producers whose emissions meet standards cut production by over 50%.
  • Carbon producers whose emissions did not meet standards suspended production.  
  • Melting and casting processes in the secondary metal production cut by half.
  • Pharmaceutical companies that produce active pharmaceutical ingredients (API) and pesticide companies that use organic solvents suspended production if they discharged VOCs.
  • Primary aluminium producers cut production by over 30%.
  • Alumina producers cut production by 30%.
  • Carbon producers cut production by half.
  • Melting and casting processes in the secondary metal production cut by half.
  • Pharmaceutical companies that produce active pharmaceutical ingredients (API) and pesticide companies that use organic solvents in production suspended production if they discharged VOCs.

 

Transportation beyond peak hours

  • Transport of raw materials and finished products across steel, coke, nonferrous metals, power, and chemicals should be conducted beyond peak hours.
  • Plants are highly encouraged to use freight vehicles with fewer exhaust emissions, such as those that meet the national IV and V emission standards.
  • Vehicles that meet the national IV and above emission standards are required to account for over 80% of the overall freight vehicles during the heating season.
  • During heavy pollution, delivery vehicles are banned from entering or leaving the ports across Circum-Bohai Sea region. This excludes the transportation of basic goods for daily use or special purposes.
  • Vehicles that meet the national IV and above standards will avoid the ban if they are moving foreign traded goods or international travellers.
  • Delivery vehicles, except for those that ensure production safety, are banned from entering or leaving the plants of key sectors.
  • Transport of raw materials and finished products across steel, construction materials, coke, nonferrous metals, chemicals and mining sectors should be conducted beyond peak hours.
  • Logistics distribution in urban areas, between urban areas and ports or between ports should also be conducted beyond peak hours.
  • If pollution exceeds the yellow-alert level, diesel vehicles, except for those that ensure production safety, are banned from entering or leaving the plants. This excludes the transportation of basic goods for daily use or special purposes.
  • Vehicles that meet the national V and above standards can avoid the ban if they are moving foreign traded goods or international travellers.

 

Pernyataan Sumber Data: Kecuali informasi yang tersedia untuk publik, semua data lainnya diproses oleh SMM berdasarkan informasi publik, komunikasi pasar, dan mengandalkan model database internal SMM. Hanya untuk referensi dan tidak menjadi rekomendasi pengambilan keputusan.

Untuk pertanyaan atau informasi lebih lanjut, silakan hubungi: lemonzhao@smm.cn
Untuk informasi lebih lanjut tentang cara mengakses laporan penelitian kami, hubungi:service.en@smm.cn
Berita Terkait
Situasi di Timur Tengah terus mereda, dan selera risiko kembali meningkat, mendorong harga tembaga [Komentar Pagi Tembaga SMM]
14 menit yang lalu
Situasi di Timur Tengah terus mereda, dan selera risiko kembali meningkat, mendorong harga tembaga [Komentar Pagi Tembaga SMM]
Baca Selengkapnya
Situasi di Timur Tengah terus mereda, dan selera risiko kembali meningkat, mendorong harga tembaga [Komentar Pagi Tembaga SMM]
Situasi di Timur Tengah terus mereda, dan selera risiko kembali meningkat, mendorong harga tembaga [Komentar Pagi Tembaga SMM]
14 menit yang lalu
Ekspansi Pertambangan Zambia Menghadapi Tantangan Infrastruktur di Tengah Peningkatan Investasi
7 jam yang lalu
Ekspansi Pertambangan Zambia Menghadapi Tantangan Infrastruktur di Tengah Peningkatan Investasi
Baca Selengkapnya
Ekspansi Pertambangan Zambia Menghadapi Tantangan Infrastruktur di Tengah Peningkatan Investasi
Ekspansi Pertambangan Zambia Menghadapi Tantangan Infrastruktur di Tengah Peningkatan Investasi
Sektor pertambangan Zambia tengah memasuki fase ekspansi signifikan seiring produsen internasional besar meningkatkan belanja modal untuk menyelaraskan dengan ambisi pemerintah meningkatkan produksi tembaga nasional menuju 1 juta metrik ton per tahun. Namun, menurut laporan media asing, analis industri memperingatkan bahwa target produksi jangka panjang negara tersebut sangat bergantung pada apakah infrastruktur pendukung berupa jaringan listrik dan transportasi dapat berkembang seiring dengan kapasitas tambang. Kendala operasional utama tetaplah ketersediaan listrik di seluruh Copperbelt. Dengan lebih dari 83% basis listrik nasional Zambia sebesar 3.985 MW bergantung pada aset tenaga air seperti Kafue Gorge dan Kariba North, penurunan permukaan air akibat kekeringan baru-baru ini telah mengungkap kerentanan energi yang parah di sektor pertambangan. Fluktuasi jaringan listrik yang tidak terjadwal dan pemadaman bergilir darurat menimbulkan risiko operasional akut bagi operasi pemrosesan yang intensif energi, di mana gangguan listrik menyebabkan guncangan termal parah pada lapisan bata tungku peleburan tembaga, mengakibatkan kerusakan peralatan fisik dan penghentian operasional yang berkepanjangan. Untuk memitigasi gangguan ini, perusahaan pertambangan semakin banyak berinvestasi dalam proyek energi terbarukan di luar jaringan, kapasitas PLTS skala utilitas, dan impor listrik regional. Di luar energi, pertumbuhan produksi yang berkelanjutan akan memerlukan investasi modal dalam jaringan logistik kereta api, infrastruktur air, dan kapasitas teknis pemasok lokal.
7 jam yang lalu
Pemilu Zambia: Investor Pantau Pertumbuhan Pertambangan, Kontinuitas Kebijakan di Tengah Reformasi Ekonomi
9 jam yang lalu
Pemilu Zambia: Investor Pantau Pertumbuhan Pertambangan, Kontinuitas Kebijakan di Tengah Reformasi Ekonomi
Baca Selengkapnya
Pemilu Zambia: Investor Pantau Pertumbuhan Pertambangan, Kontinuitas Kebijakan di Tengah Reformasi Ekonomi
Pemilu Zambia: Investor Pantau Pertumbuhan Pertambangan, Kontinuitas Kebijakan di Tengah Reformasi Ekonomi
Sementara Zambia bersiap menghadapi pemilihan umum, investor internasional dan analis logam berfokus pada apakah keberlanjutan kebijakan makroekonomi dapat menghasilkan pertumbuhan tambang yang nyata, menurut laporan media asing. Perhatian pasar utama tertuju pada pelaksanaan investasi asing langsung, keandalan sektor listrik, serta reformasi ekonomi struktural yang diperlukan untuk mendukung target produksi jangka panjang. Sebagai tulang punggung perekonomian nasional, menyumbang 70% pendapatan ekspor dan lebih dari 10% PDB, sektor tembaga tetap menjadi tolok ukur utama bagi investor institusional. Pelaku pasar terus memantau apakah alur proyek, termasuk ekspansi First Quantum yang sedang berjalan, investasi berkelanjutan dari Barrick, dan kembalinya Vedanta, dapat menghasilkan peningkatan produksi aktual menuju target jangka panjang peningkatan tiga kali lipat produksi tembaga nasional dari sekitar 1 juta ton. Meskipun pemerintah telah berjanji menjaga tarif royalti tambang tetap stabil, operator asing menghadapi potensi penyesuaian rantai pasok di bawah kerangka konten lokal yang mewajibkan perusahaan tambang meningkatkan pengadaan domestik dari 20% menjadi 40% dalam tiga hingga empat tahun. Karena pemasok lokal sering kekurangan modal dan kapasitas teknis yang diperlukan, operator asing dapat menghadapi kemacetan operasional atau ketidakpastian penegakan aturan. Selain itu, peningkatan produksi bergantung pada penyelesaian kerentanan jaringan listrik berbasis tenaga air melalui investasi surya dan reformasi jaringan menyusul pemadaman bergilir parah akibat kekeringan. Investor juga mencermati negosiasi program lanjutan IMF setelah fasilitas sebelumnya senilai $1,7 miliar berakhir pada Januari, serta risiko defisit fiskal terkait pembelian stok penyangga jagung oleh negara.
9 jam yang lalu
Analysis of production cuts in winter season 2018-2019 - Shanghai Metals Market (SMM)