SHANGHAI, Jul 3 (SMM) – China steel prices began to climb from the end of June, driven by a wave of deepening production curbs across the smog-plagued Hebei province.
This round of production curtailments is the most stringent since the winter. Government authorities intensified control over steel production, likely to extend their efforts to ease overcapacity and to limit growth in iron ore prices.
Top steelmaking hub of Tangshan in late June required mills across the region to deepen production curbs until the end of July, while another major hub of Wu’an ordered a certain number of sintering machines and blast furnaces to suspend in July.
Tangshan’s curbs will no longer exclude mills that are set to relocate to rural areas, and inspectors would be dispatched to steel mills to ensure the thorough implementation of production cuts.
This round of production curbs is expected to affect pig iron output by 4.39 million mt through the end of this month. This would equate to crude steel output of 3.67 million mt, and iron ore demand of 7.56 million mt.
In Tangshan, some 1.25 million mt of monthly steel plate capacity and 850,000 mt of monthly rebar and wire rods capacity will be affected.
A total of 15 sintering machines and 14 blast furnaces in Wu’an will shut in July, which is expected to impact sinter output by 2.2 million mt, pig iron output by 809,100 mt and iron ore demand by 1.39 million mt.
Blast furnaces in Wu’an have the capacity to produce 95,200 mt of molten iron per day, and their output posted a daily average of 82,200 mt in June, with an operating rate of 84.55%.
Output of molten iron across Wu’an is expected to average 69,100 mt per day in July, down 13,100 mt from June. This is estimated to affect demand for iron ore by 22,600 mt per day.
Another steelmaking hub of Anyang also issued its smog control plan for July over the weekend, but it imposed curbs only on sintering machines, which will have little impact on output of crude steel and pig iron, as mills could procure lump and pellets to maintain production.
Shanxi province, another smog-prone region in north China, meanwhile, launched a campaign to crack down on illegal pollution discharge through August.
Environmental authorities of the second largest steelmaking province of Jiangsu met at the end of June to discuss the progress in promoting ultra-low emission across the steel sector. SMM learned that most major steelmakers in Jiangsu have met the emission standards, and mills who have yet to reach the standards have four months to do so.
Steelmakers in Jiangsu that managed to upgrade to ultra-low emission will be exempted from production curbs under winter smog-alerts.