Tightening emission standards should reduce steel production in Hebei province

The stricter emission control measures implemented by the Chinese environmental authorities in Tangshan City are likely to reduce steel production in the region. New emission limits could lead to the closure of a large number of furnaces and factories in the city, thus resulting in a significant reduction in production. However, this development is believed to have a positive impact on the global steel industry, as it could reduce the oversupply of Chinese steel mills.

Tangshan, located almost 100 miles east of Beijing, is one of the key steel producers in Hebei province. There are approximately 25 metallurgical plants and over 100 furnaces operating in the city. The city produces almost 90 million tons of steel per year. New emission regulations have been introduced to reduce air pollution in the region as well as limit steel production in the province.

Meanwhile, the emission control measures are likely to have an impact on the domestic steel price. For example, billet prices in northern China have already increased by 60 yuan per tonne in mid-July. Steel traders expect a similar increase in finished steel product prices due to supply cuts. Emissions management in Tangshan City in Hebei Province could significantly limit the region's steel production.

According to the latest government data, crude steel production in the country declined slightly during the month of June this year. The output was 68.95 million tons during the month, down 0.8 percent from the previous year. The country's total steel production fell by almost 1.3 percent to 409.97 million tonnes in the first six months of 2015, data from the country's National Bureau of Statistics showed.