SMM10, 28 March:
In mid-early October, the Ministry of Ecological Environment issued the "Action Plan for Comprehensive Control of Air pollution in Autumn and Winter 2019-2020." according to the plan, the key words of environmental protection in Beijing, Tianjin, Hebei and its surrounding areas this year are "differential control" and "prohibition across the board." and on the whole, the probability is becoming more stringent.
Today, Henan and Shandong "outflow" the specific news of environmental protection and production restrictions in autumn and winter, making the snail disk continue the strong trend of last week (the settlement price of thread futures is 3341 yuan / ton, up 21 yuan / ton from last Friday). The spot market has been boosted by this, and the national average price has also risen by 14 yuan / ton. Of which:
It is reported that compared with last year's slightly "rough" environmental protection policy, the performance level of pollution emissions in the industry is significantly better than that of other enterprises in the same industry, and production can not be restricted. The control measures issued by Shandong Province this time are more accurate and effective: it shows that differential management will be implemented according to enterprise ratings (A, B, C) this year, among which A-grade enterprises can not be restricted by production restrictions. In addition, the proportion of production restriction can be appropriately increased for iron and steel enterprises with capacity utilization rate of more than 120% in 2018.
According to SMM research, local steel mills said that there are no specific corporate rating results and specific implementation requirements for production restrictions during the heating season. However, most steel mills said that in terms of the implementation of phased production restrictions in September, the probability of environmental production restrictions has become more stringent this year.
Similarly, the Henan Provincial Department of Ecological Environment held a press conference today, the meeting said: production enterprises will be treated differently, air pollution control will be strictly prohibited "across the board", and many measures will be taken to prevent and deal with heavy pollution weather at the same time.
Although during the 2018 heating season, Henan Province requires iron and steel enterprises to limit production by more than 30% (including rotation) in addition to iron and steel enterprises that have steadily reached the ultra-low emission limit. However, under the strong temptation of high profits, the actual implementation of environmental production restrictions last year was much less than the documents, and some steel mills said they were basically not subject to production restrictions, according to SMM research. But this year, the government's control measures are more targeted, and the actual probability of implementation is stricter than last year.
In view of the fact that the current thread spot fundamentals are still supported by rigid demand, and there have been frequent safety accidents in steel mills recently, and subsequent safety inspections may be unfolded, the news that today's regional environmental protection production restrictions are becoming more stringent will further support spot prices in the short term. However, in the later stage, up to now, in addition to Beijing, Tianjin, Hebei and the surrounding areas, Jiangsu Province, a major province of building materials, is still silent (50% production was restricted in Jiangsu Province last year, and production in Xuzhou City was completely stopped). The effect of production restriction or sharp decline, spot price weakness is still difficult to reverse.