Omicron influences factory production in Central China

A new variant of the COVID-19 Omicron virus is spreading rapidly in China, with steel mills in the hardest-hit area of ​​Central China reporting outages a week after the variant was first confirmed on January 8 in northern China's Tianjin municipality.
As of Friday, Chinese medical authorities were responding to the spread of the virus in the city of Anyang in central China's Henan province, about 400 kilometers southwest of Tianjin, after two cases of Omicron virus infection were confirmed on January 9. who came from Tianjin.

Cases of the new variant were mostly concentrated in those two regions as of late Friday, according to Mysteel Global. As of January 13, there were 143 local cases of COVID-19 in China, of which 98 were in Henan province and 34 in Tianjin.

Local steelmakers in Tianjin were still able to produce normally by Wednesday, although the transport of raw materials and finished steel was disrupted, Mysteel Global said. However, in the more populous province of Henan, the tougher fight against the pandemic has begun to take a toll on steel production as well as the daily lives of employees, Mysteel Global understands.

With a population of almost 100 million, Henan is China's third most populous province and also a key steel production base. According to the latest data, Henan produced about 35.3 million tons of crude steel in 2020, accounting for 3.3% of the country's total steel production that year.

In Anyang, the city of Henan hardest hit by lockdowns and restrictions on the movement of people and vehicles, a local steel plant with a capacity of 2 million tons per year has completely suspended operations over the past few days, plant officials confirmed on Friday.

“Production was halted three days ago as the plant is not getting raw materials and trucks are now banned from entering and exiting the site,” one official said. The company mainly manufactures rebar and wire rod and uses trucks for the majority of shipments, the official said.

“Overcoming the pandemic is now the top priority, and everything else should be put on hold,” she said.

Some employees are required to quarantine at the plant and take a COVID test once a day, she said. “I really hope this ends soon,” she said.

Officials at the 10Mtpa steel plant, also located in Anyang, said restrictive measures were taken against his company, but for now, the plant can still maintain production levels as the plant can use raw materials from domestic stocks or use iron road to transport the necessary feed.

“The impact on our production will not be as obvious because we have already significantly reduced our production volume to meet very strict environmental protection requirements,” he said.

A trader from Shandong in East China supplying iron ore to Henan steel mills said production at local mills was disrupted by the discovery of the Omicron variant, but he said it was unlikely to affect the iron ore market much.

“Henan steel mills have been restocking iron ore before (before the recent outbreak) and are following production limits, so they wouldn’t buy much even if there wasn’t an Omicron outbreak,” he said.