Posted on 24 Feb 2022
Those steel producers in Tangshan, China's top steel producing city in North China's Hebei province, obliged to curb their production to help ensure clear skies for the Winter Olympic Games hosted by Beijing say they're lifting production already or will soon, now that the Games have ended, Mysteel's latest investigation shows.
While operations at about one-third of the city's blast furnaces were unaffected by the sports event that ended on February 20, those that were affected will emerge from maintenance stoppages this week after the production restrictions were relaxed on Monday, the investigation found.
Mysteel's latest investigation across 25 steel enterprises in Tangshan hosting 126 blast furnaces showed that as of February 23, ten of the 80 furnaces under restrictions had resumed operations while another three furnaces would be brought back online the next two to three days.
The Winter Olympics had opened on February 4 and from around the end of January in the week prior to the opening ceremony, many Tangshan steelmakers had been under production restrictions as part of air pollution control measures introduced prior to and during the Games. The restrictions were strengthened over the period and as of February 17, capacity utilization among all 126 units had dipped to only 52.1%, as Mysteel Global reported.
The ten units restarted this week have lifted the run-rate to 68% on Mysteel's estimates and resulted in a 42,300 tonnes/day increase in molten iron output. When the three others join them, this will nudge the capacity utilization rate higher to 71%, the survey showed.
But even with the increase, the rate will still be lower than during the same period last year, Mysteel Global notes. Moreover, market sources anticipate that production curbs to be re-imposed in coming week or so ahead of the ParaOlympic Winter Games commencing at the same venues from March 4 and China's top annual political meetings starting on March 4 and 5 in Beijing respectively.
"The curbs are finally lifted, for now. The steel mills required to suspend operations are acting swiftly (to restart blast furnaces)," an industry source based in the city noted.
With the production curbs quickly lifted, domestic steel market sources have expressed concern that a sudden increase in steel supply will place downward pressure on steel sales and prices, given that China's steel demand at the moment remains lukewarm.
"Steel sales are not good, yet makers are ramping up production. I am afraid the mills will soon begin losing money," one source from a steel mill based in East China said.
As of late February 23, the Q235 1mm square billet price stood at Yuan 4,650/tonne ($734.6/t) EXW and including the 13% VAT, down Yuan 40/t on day.
Source:Mysteel Global
