Tangshan city in China diminishes steel production

Steel mills in Tangshan City, Hebei Province have been ordered to continue to cut blast furnace production for environmental reasons until October.

The daily losses in pig iron production for the remainder of October should be greater than during most of September, but some traders began to doubt the production cuts would be strictly enforced.

The Tangshan City government on October 9 ordered 29 of the 32 local steel mills to suspend blast furnace production by at least 50% on average during October 10-31. The remaining three plants, namely Shougang Qian'an Iron & Steel, Shougang Jingtang Iron & Steel and the Zhenheng Group Steel Works, will be exempted from the cuts.

S&P Global Platts estimates that the average utilization of blast furnaces in Tangshan will be around 59% between October 10th and 31st, up from 33% between September 28th and October 2nd, but still lower than the 85% utilization rate. during September 1-23. Daily pig iron losses are expected to be 152,000 tonnes per day from 10 to 31 October.

However, one steel company noted that Tangshan ordered large-scale production cuts in blast furnaces in July and August - mostly by 30% -50% - but the fulfillment of these orders was very poor.

It is believed that, unless air pollution is extremely severe, the production cuts in blast furnaces in Tangshan will be limited until the end of October.

Some traders say supply and demand will be balanced in October as it was a strong season for the construction sector. However, they were concerned that when seasonal demand began to decline in November, high steel production would affect prices.