Environmental Protection Inspections to Affect Steel Plants Using Billet and Iron Ore Prices

SHANGHAI, Apr. 17 (SMM) - The news that Hebei province plans to cut 1/3 steel capacity was a focus of markets. Actually, Hebei Provincial Governor Zhang Qingwei said: "Hebei province now has 200 million mt of steel capacity, and plans to cut 60 million mt." But no more precise timing of the policy was decided. The market is skeptical of the implementation, and some steel plants in Hebei reported "Implementation timing has not been decided, maybe restructuring of the industry will accelerate".
 
The news caused market expectations that environmental protection inspections and energy savings and emission reduction policies will be implemented. Air pollution from coal burning accounts for 70% of total pollutant discharge. Coal inventories in Beijing totaled 25 million mt, with 50 million mt in Tianjin and nearly 300 million mt in Hebei. Hebei province will control both pollutant discharge and coal consumption to cut coal burnt. Meanwhile, the province will also transform industry structure by removing high-polluting enterprises out of the province and developing intensive, green and low-carbon industries.
 
Steelease believes environmental protection is an emphasis of Chinese government this year, and policies will be mainly made to steel plants that buy billet to produce and consume massive coal. Should policies are implemented strictly, steel supply will be affected, which will boost the market. But that will also affect steel output, causing iron ore prices to fall.