Steel production restrictions in Tangshan in China’s Hebei Province announced on July 4 are expected to be tightened in the last ten days of the month, according to unofficial information shared with SteelOrbis by market sources in the region. During the July 21-31 period, the production activities of 13 blast furnaces will be halted in Tangshan, a major steelmaking hub in northern China, which will affect a daily capacity of 58,000 mt molten iron.
At the same time, production by some blast furnaces, which were not in operation from early July, may be resumed. For instance, currently two blast furnaces are heard to be resuming production, equal to a daily capacity of 14,000 mt of molten iron.
It means that in total pig iron production in Tangshan will be reduced by up to 440,000 mt in the last ten days of July. In the July 22-24 period, four blast furnaces have halted production, negatively affecting daily molten iron capacity of 12,900 mt.
Spot rebar and HRC prices in the Chinese domestic market have increased by RMB 17/mt ($2/mt) and RMB 30/mt ($4/mt) since Friday, respectively, reaching RMB 3,790/mt ex-warehouse and RMB 4,005/mt ex-warehouse, according to SteelOrbis’ data. Futures prices of rebar and HRC at Shanghai Futures Exchange have increased as well, though very slightly, by 0.37 percent and 0.51 percent, respectively, from Friday’s settled levels.
Though price increases in the futures and local spot markets have been limited, they signal that prices may be supported even in the current conditions of slow consumption due to hot weather, rainfall and typhoons.
Iron ore prices have moved down slightly today (iron ore 62 percent Fe fines have lost $0.9/mt today to $114.65/mt CFR) due to weak demand, steel production cuts and the still weak property market. Market sources believe that the recent steel production cuts and lower raw material prices may improve the profitability of Chinese mills, while stability of local steel prices may exert a positive effect on the global market.
$1 = RMB 7.145
