SHANGHAI, Sep 3 (SMM) – Steel supply across China is expected to substantially fall, as authorities across various regions require tougher production curbs to improve air quality and as narrower profit margins prompt steelmakers to curtail production.
Wu'an, one of China's major steelmaking hubs in Hebei province, issued its plan for production control across steel, coke and cement in September 1-31 over the weekend, which is a deepening from August.
Fourteen steelmakers across the city are divided into three groups, which will face additional production limitations of 20%, 15% and 10%, on top of required curbs under the smog-control plan by Wu’an for August and that by Handan for the third quarter. Wu’an is under the administration of the prefecture-level city of Handan.
Sintering machines and blast furnaces that failed to meet emission standards in August will suspend for month-long rectification from September 1.
SMM estimates the production curbs across Wu’an will impact pig iron output by 1.37 million mt and iron ore demand by 2.3 million mt this month. This is up 378,200 mt and 650,500 mt from affected pig iron output and iron ore demand, respectively, in August.
Stricter production curbs by Wu’an will counter the easing of controls in Tangshan, top steelmaking hub in China.
Tangshan finalised its smog-control plan for September over the weekend, which came in similar to the draft plan and lenient than August.
The city’s plan will impact production of pig iron by 1.28 million mt throughout this month, and demand for iron ore by 7.16 million mt, showed SMM calculations.
Production limitations under anti-smog plan and emergency measures affected pig iron output by 2.2 million mt and iron ore demand by 4.32 million mt in August, compared to 3.2 million mt and 5.88 million mt, respectively, in July when Tangshan sharply intensified its anti-smog measures.
Steelmakers in Tangshan steel face possible additional curbs however. Those in Lubei, Lunan, Gaoxin, Kaiping, Fengnan, Guye districts and Luozhou and Qian’an cities have been required to impose greater limitations on their sintering machines between CST 18:00 September 2 and 12:00 September 7, in anticipation of poorer pollutant diffusion conditions.
Anyang, another city in Hebei, will slightly deepen its limitations on sintering machines during August 30-September 16.
Electric arc furnace (EAF) steelmakers, meanwhile, plan production curtailments on poor profit margins and tight scrap supplies.
Eleven EAF steelmakers in Sichuan, Southwest China, will suspend production for five days each in the first half of September, which is expected to impact daily output by an average of 11,000 mt during that period. Those EAF mills will extend their production cuts in the second half of the month, if scrap supplies remain tight.