Tangshan imposed stricter winter production restrictions

SHANGHAI, Nov 6 (SMM)—The 2020-21 winter production restrictions have been issued in the Beijing-Tianjin-Hebei Region, Tangshan and Yangtze River Delta, but this was met with subdued impact from the iron ore market, as the disruption on blast furnace operation is limited.

It is understood that the restrictions will target 39 key industries this year (as compared to 15 key industries in 2019) with stricter restrictions. The industries involved in are likely to adhere to stricter targets, which is divided into two periods.

Restrictions are unlikely to be stricter at Beijing-Tianjin-Hebei Region and Fenwei Plain. Ultra-low emission transformation targets are more specific in steel industry: by the end of December 2020, strive to complete the ultra-low emission transformation of about 200 million mt of the production capacity.

Restrictions in Yangtze River Delta have tightened slightly from last year (from slightly flexible reduction ratio to setting a standard guideline).

Production cut of blast furnace in Tangshan autumn-winter season of 2019 and 2020

Note: *excluding mills which have ceased operations or relocated

The required capacity cut of pig iron totalled 22.04 million mt in 2019, with actual decrease of 11 million mt at the effectiveness of 50%, according to SMM data. The pig iron output loss is expected to be 9.6 million mt in 2020 if restriction measures are enforced strictly. The output impact  estimated to stand at 2.7 million mt including mills ceasing operations or relocating, less than last year even at the effectiveness of 100%.

But restrictions are likely to be stricter as this year is the final year of the “Blue Sky Defense Plan”. Ultra-low emission transformation targets total 110 million mt by the end of 2020 in Hebei. Producers below standards will be forced to cut production in Tangshan.

After production restrictions are announced in Yangtze River Delta and Fenwei Plain, producers in Fenwei Plain that fall below the required standards will need to accelerate ultra-low emission transformation. Steel mills in Shanxi reported stricter targets and said mines and beneficiation plants may enforce off-peak production.

For more updates on the China iron ore sector, please refer to the latest November edition of the China Iron Ore Monthly Monitor.