Blast furnace operating rates fell amid production restrictions

SHANGHAI, Mar 11 (SMM)—Operating rates of blast furnaces (BFs) at Chinese steel mills dropped 1.2 percentage point from a week ago and 1 percentage point from a month ago to 85% as of March 11, SMM survey showed. The Department of Atmospheric Environment of the Ministry of Ecology and Environment issued a work investigation letter to the Tangshan government and led a team to Tangshan for investigation. Tangshan subsequently held an emergency environmental protection meeting and launched a first-level red warning response, requiring companies to restrict or suspend production. Shandong Jinan, Dongying and Yantai have also issued orange warnings for heavy air pollution. The stricter environmental restrictions have led to a further decline in the operating rates of blast furnaces this week.

Operating rates of BFs at Chinese steel makers 

Daily iron ore consumption in Tangshan will decline by 155,200 mt amid these production restrictions. Affected by this, iron ore futures contracts fell by their daily limits on Tuesday March 9, and other ferrous metals contract also followed lower. However, the US House of Representatives approved a $1.9 trillion stimulus package, and President Joe Biden may announce an infrastructure plan of more than $2 trillion at the end of March. In addition, China’s February social financing, M2 money supply and newly-added loans all topped expectations, which boosted market sentiment. Demand for spot steel products also improved. The trading volume of construction steel rose 4.9% on the month to 164,300 mt on March 10. Steel products prices are likely to rebound as demand gradually improves.