Steel mills in Tangshan in North China’s Hebei province are maintaining relatively normal production right now, despite the local government’s issuance of an ‘orange’ alert on Wednesday warning that pollution had temporarily impacted air quality, market sources confirmed on Thursday.
A notice released on Tangshan’s government official website on January 15 said that an ‘orange’ alert for air quality – the second in severity to a ‘red’ alert – had been issued, meaning that all related emergency measures – including curbs on local steelmakers’ operations – were required to be observed, effective immediately. How long the alert might remain in force would depend on the concentration of pollutants in the atmosphere, it explained.
Nevertheless, most steel mills still just need to continue observing their previous levels of production restrictions, in line with the city’s monthly air pollution control plan, Mysteel Global noted from the notice.
“In fact, many steelmakers are tasked with harnessing their process off-gases for supply for municipal heating in this winter, which means they have some ‘flexibility’ regarding their operations, even when emergency curbs need to be observed,” a Tangshan-based market insider close to local steel mills remarked.
According to Mysteel’s latest survey, the blast furnace capacity utilization among the 136 blast furnaces in Tangshan Mysteel surveys weekly stood at 78.83% over the week of January 3-9, some 7.19 percentage points higher than one year ago.
Indeed, the latest rounds of emergency curbs turned out to have less of an impact on local steel mills’ production than anticipated. For example, during the most recent period of mandated output constraints during the period over January 2-7 – when the curbs were just as severe as those in place now – there were also fewer additional cuts to mills’ operations, as Mysteel reported.
“You can see this trend from iron ore trading at local ports,” another Tangshan-based market watcher noted. “Recently, steel mills here have been actively buying more iron ore quantities at ports for both pre-holiday restocking and for sustaining their current normal production, even though the prices were still at a relatively high level.”
On January 15, Mysteel’s price index for portside 62% Fe Australian iron ore fines (PORTDEX 62% Fe Australian iron ore fines) stood at Yuan 715/wmt ($103.86/wmt) FOT Caofeidian and including 13% VAT, up another Yuan 21/wmt on month or Yuan 144/wmt on year.
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