Posted on 23 Mar 2022
More steel producers in Tangshan, China's top steel production city, are being forced to hot-idle blast furnaces as community lockdowns and traffic controls imposed in response to resurging COVID-19 case numbers are running them short of raw materials and auxiliary material supplies.
Mysteel's tracking has found that as of March 21 night, another Tangshan mill had banked a blast furnace, following that hot-idled on March 20, and another whose operation rate is severely scaled back.
Though the number of units idled so far is comparatively tiny given the number of meltshops the city hosts, the tough local-government measures to contain the virus were only imposed on March 20, Mysteel Global notes. More mills will be forced to bring down their furnaces if the virus refuses to be contained and supplies of raw materials and other inputs for the city's steelmakers continue to thin, local mill sources warned.
Tangshan hosts over 126 blast furnaces which last year contributed to 13% of the country's total pig iron output or 113.8 million tonnes, according to official statistics.
In order to fight a recent resurgence of the coronavirus pandemic from March 19, Tangshan – home to 7.7 million residents – has imposed neighborhood lockdowns and erected roadblocks, only allowing ambulances, police cars and trucks carrying essential goods such as food and vegetables to use the roads, as Mysteel Global reported.
The stringent measures were taken to comply with China's "dynamic-zero" COVID-19 containment strategy. Existing confirmed cases in Tangshan reached 14 as of Monday, with five newly reported on that day.
"We have already hot-idled one blast furnace due to a shortage of coke and lime," a Tangshan mill official told Mysteel Global, saying that no deliveries of any raw materials can be made to the plant because of the restrictions.
He and many other employees have been quarantined at the steelworks since Saturday, and he expected the lockdown and transportation restrictions to last for several more weeks at least.
"In another ten days, if the situation still does not improve, we will have to hot-idle another one (blast furnace)," he said.
Mysteel's latest survey showed that as of March 21, steel mills in Tangshan generally had sufficient iron ore stocks for just one-week's consumption. Some mills with access to rail capacity and can receive raw mats via rail wagons face less supply pressure, however, as rail is still running normally at the moment.
Nevertheless, the real threat to mills' production currently is a foreseeable shortage of auxiliary materials such as ferroalloys and lime which, for most, can only last for three to four days of usage, according to Mysteel's survey.
The city government announced on March 21 that local key industrial enterprises whose businesses relate to environmental protection, the provision of living essentials, the production of medical supplies for pandemic prevention and control, or of goods and services to "guarantee safe operations" of factories, could apply for vehicle passes to enter cordoned-off areas.
However, while the policy offered mills some hope of restrictions on their activities being eased, local industry sources maintained that actual help might be very limited,
"The passes will be very hard to get, and applicants need to go through very strict review and approval procedures. With the (virus) cases still increasing, no one dares take risks," one iron ore trader based in Beijing who sells to Tangshan said.
"On the other hand, most local truck drivers are already quarantined, and drivers from other cities are unwilling to deliver to Tangshan for fear that once they enter, they will face quarantine after they exit," he said.
Moreover, the impact of the pandemic is not limited to Tangshan, as the virus has already spread fast across China.
For example, in East China's Shandong, the country's third largest steel producing province, the number of serious infections detected had reached 2,483 as of March 21, Mysteel Global notes. Many Shandong mills have already been forced to stop their furnaces too, due to pandemic control measures there, a market source said.
An official with one mill in Shandong lamented that her company has been completely shut down since mid-March due to the controls. "All of the employees were sent home, with only a few of us remaining here on duty," she said. The city in which the mill is located is among those with a high number of infections – above 150 as of March 21 - in Shandong, Mysteel Global noted.
Source:Mysteel Global
