According to the latest updates, the local government of Tangshan city in China has decided to enforce tougher production constraints on steel mills’ operative sintering capacities starting from 25 Feb till 2 Mar’19.
Previously, mills had to observe production cuts of 30% over February 16-23, depending on which of the four categories they belong to in accordance with their individual environmental protection efforts and locations. But on Sunday last week the government raised the lower limit to 40% as air over the city remained heavily polluted.
However, the quantity of iron and steel output that will be affected by the extension of production cuts is a bit difficult to estimate. According to market participants, this directive will largely hamper the local steel mills’ willingness to purchase raw materials such as iron ore, especially when prices of imported iron ore are still relatively high and while their margins on finished steel remain low. These stricter rules on sintering units may result in softening of raw material prices.
Being the largest steelmaking city of Hebei province, Tangshan has around 116 MnT of steel capacity or 11% of the country’s total steel manufacturing capacity.
Tianjin’s steel hub plans steel production using German’s ecological approach
Daqiuzhuang, one of China’s largest steel production centers in the southwestern suburbs of Tianjin, plans to inject 1 billion yuan (USD 147.5 million) to build a Sino-German ecological town. The town will be spread across 4.7 square kms and will target steel production using Germany’s ecological production approaches.
Industrial upgrading and excessive production capacity reduction are top priorities for Daqiuzhuang, which was touted as a major centre of economic growth in the 1980s. However, later on in 2000s, many State-owned steel companies were closed due to sluggish growth but private businesses took shape and the town lost its charm to Tangshan in North China’s Hebei province, which is now firmly established as the country’s No 1 steel production center.
In recent years, Daqiuzhuang’s steel industry has sustained a production volume of 40-50 MnT, generating combined revenue of about 60 billion yuan annually. Currently the town has some 600 steel companies, many of which are thirsty for the industrial upgrade.
According to market sources, German companies are interested in increasing their investments and making a presence in the town, due to its proximity to Xiongan New Area, an emerging new area in Hebei about 100 kilometers southwest of Beijing, which will implement the Beijing-Tianjin-Hebei integration plan and coordinated development strategy.
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