Tangshan’s relaxed output curbs in Dec to put pressure on steel market

Tuesday, 03 December 2019 14:15:24 (GMT+3)   |   Shanghai

Tangshan city, China's largest steelmaking hub, has announced an output restriction policy for December, according to which restrictions on steel production and sintering will likely be looser this winter than in previous years. This will likely exert a negative impact on steel prices as steel output will be at comparatively high levels.

In particular, steel mills that have been graded A and B for emissions policy compliance will be free from output restrictions in December. Mills in grade C will have implement restrictions equivalent to those enforced when a level Ⅱ pollution alert is implemented, for the whole of December.

However, the Tangshan government has not clarified the extent of the output reductions grade C mills will have to make. Meanwhile, it is uncertain whether the restrictions will continue to be imposed in January and February next year.

In 2018, Tangshan adopted a four-tier system to control mill emissions from October 1, 2018 to March 31, 2019. Grade A mills operated without any production cuts, tier B mills were told to cut blast furnace output by 30 percent, grade C mills needed to make a 50 percent output cut, while grade D mills had to cut blast furnace output by 70 percent and completely suspend sintering.

On Tuesday, December 3, rebar futures at the Dalian Commodity Exchange have declined by RMB 8/mt ($1.1/mt), closing at RMB 3,599/mt ($512/mt), down RMB 42/mt ($6/mt) from the settled price a week ago. 

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