According to the draft plan released by the Ministry of Ecology and Environment of China, the restrictions on the steel industry for the heating season from October 1, 2019 to March 31, 2020 will be not stricter than during the previous heating season. Moreover, local governments will be still allowed to regulate the restrictions according to local mills’ emission levels, so those plants, which have met ultra-low emissions, will be allowed to produce at 100 percent capacity.
The restrictions over the winter will be implemented in 28 cities, the same as last year. In key cities, such as Tianjin, Shijiazhuang, Tangshan, Handan, Xingtai and Anyang, the utilization rates will be not higher than 50 percent, while in the rest of the cities restrictions will be at 30 percent. The governments implemented the same measures last year but this failed to stop steel production from increasing.
By the end of 2020, about 60 percent of all Chinese steel mills will have to meet ultra-low emissions standards, while 80 percent of plants will finish their transformation to meet such standards by the end of 2025.
The reports about possible relaxed production restrictions for the heating season have influenced sentiments in the Chinese steel market. As a result, average local rebar and HRC prices in China have lost RMB 33/mt ($4.7/mt) and RMB 50/mt ($7/mt) respectively, according to SteelOrbis’ data.