Posted on 07 Feb 2022
Much as market watchers had predicted, more steel producers in North China have been pressed by local authorities to initiate additional production restrictions as part of efforts to reduce air pollution before the Winter Olympic Games commence within a few days. The most recent order is for steel mills in Tangshan, the country's top steel producing city, where producers are planning to take down another 17 blast furnaces for maintenance.
The 2022 Winter Olympics are to be held in Beijing municipality, in nearby Yanqing district and in Zhangjiakou city of North China's Hebei province over February 4-20, as reported, and though Zhangjiakou city lies around 450km to the west of Tangshan, Beijing is less than 200 kms away and is frequently engulfed in smog blamed on industries in Tangshan.
Earlier this week, several mills in the North China region interviewed by Mysteel Global had said they were yet to receive any formal notice regarding possible production cuts to ensure clear skies for the Games. Nonetheless, market pundits were anticipating that additional measures aimed at reducing atmospheric pollution were likely to be introduced - and they have been proven right.
On Thursday, steel producers in Tangshan said they had been ordered by their local government to further scale down production, with Mysteel's survey across 25 steel producers in the city indicating that they are going to gradually stop another 17 blast furnaces starting Friday.
Meanwhile, as of January 27, 62 of the 126 blast furnaces monitored had already been idled for 'maintenance', due to restrictive measures in place since January 23 as is normal practice to combat any sudden deterioration in air quality. Mysteel's survey found that average capacity utilization among these furnaces was 69.7%, reversing down 2.1 percentage points on week, or 14.8% on month.
If all 17 furnaces are taken offline as instructed, this will further reduce the capacity utilization rate to only around 50% and cut molten iron output by 64,000 tonnes/day compared with January 27.
"We received orders to make further restrictions, and we are going to shut down another blast furnace," an official from a Tangshan mill told Mysteel Global.
"The Olympics are on their way, and we had anticipated we would need to take such measures before the event," he said, adding that the new restrictions will stay in place at least until the winter sports festival is over in late February.
Source:Mysteel Global
