China’s Top Steelmaking Hub Tangshan Orders Production Cuts; Prices Fall
China’s biggest steelmaking hub Tangshan has ordered steel output curbs from Oct. 28 to tackle worsening air quality in the city, forcing some 19,000 mt/day of capacity to close for about a week, industry sources told S&P Global Platts.
China’s biggest steelmaking hub Tangshan has ordered steel output curbs from Oct. 28 to tackle worsening air quality in the city, forcing some 19,000 mt/day of capacity to close for about a week, industry sources told S&P Global Platts.
Tangshan city government has asked local steelmakers to slow operations at sintering and pellet plants and lower the utilization of pig iron and steel making capacity, according to the sources.
Six blast furnaces, with a combined capacity of 6.9 million mt/year will be suspended during the period, the sources said, adding that such output cuts typically last for a week. The curbs will be lifted once air quality improves.
The adverse impact on Tangshan’s overall steel production was relatively small, some market sources said, as its utilization of pig iron and steel making capacity was already reduced significantly by earlier government orders.
The average utilization rate of Tangshan pig iron and steel production capacity was cut to about 60% in the second quarter in compliance with Tangshan city government’s March orders to clear air pollution in the city, the sources said. The cuts rose to about 65% in July.
Tangshan’s output in the first eight months of 2021 reached 84.76 million mt, or 348,800 mt/day, down 11% on the year, data from its statistics bureau showed.
Any further steel output cuts over the next few months due to carbon emissions, high iron ore prices, or power shortages were unlikely to be larger than the current levels, market participants said.
Prices under pressure
Tangshan’s move was not enough to lift steel prices as the market remains under pressure because of China’s crackdown on commodity price speculation and a slowdown in the property sector, sources said.
China domestic rebar prices in Beijing dropped further by Yuan 95/mt ($15/mt) on the day to 5,245/mt ($820/mt) Oct. 28, after falling by Yuan 125/mt in the previous session, Platts data showed. The prices reached a five-month high of Yuan 5,970/mt Oct. 8.
Weak demand and Beijing’s crackdown on commodity price speculation was likely to play a bigger role in influencing prices going forward, sources said.
Poor property sales and land purchases in the first nine months of 2021 could accelerate the year-on-year decline in property construction in the fourth and the first quarter, according to sources.
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