After enforcing tougher production constraints on steel mills’ operative sintering capacities this week, the Tangshan city in China has issued a level 1 smog alert, the highest in the country’s four-tier pollution warning system. This alert would be in place in Tangshan from 1 Mar to 6 Mar’19.
Under China’s four-tier warning system for air pollution, red is the most severe, followed by orange, yellow and blue.
In level 1 (red) alert, steel mills are required to curb output by 40-70% or even stop production, depending on the scale of their emissions. In its last orders announced on 25 Feb – 2 Mar’19, mills had to observe production cuts of 40% as air over the city remained heavily polluted.
The Spring Festival fireworks in the month of February and although slow but production resumption after the holidays in bad weather conditions were blamed for the heavy air pollution blanketing Beijing and neighboring provinces.
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. In its war against smog and rising pollution, the city has been announcing continuous production cuts since the start of winter heating season in Oct’18. The heating season in China will be in place till Mar’19.
Situation improves in China’s steel sector this week
On the other hand, the demand for iron ore and steel seems to be picking up in China almost after 20 days of Lantern Festival as both the products prices rose up in Friday morning. The steel inventory with Chinese traders have also increased and that the weekly utilization rates at steel mills stood at about 66% this week as of 1 Mar’19.
According to market experts, more new orders indicate that the demand from the manufacturing industry is stabilizing. Meanwhile, more infrastructure projects are expected to start construction, which would further support the fundamentals of the steel market.
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