On March 19, the official branch of the Tangshan government responsible for air pollution control issued a document with new restriction plans for steel producers in the city that will be in place from March 20 until the end of December 2021. According to market sources, the measures may hurt iron ore consumption and have already pushed down ore prices on Friday. At the same time, some steel products prices have shown an increase.
Only two mills will be free from the new restrictions: Shougang Qian'an Iron and Steel Company and Shougang Jingtang Iron and Steel United.
The highest restrictıons will be for these companies: Tangshan Songting Iron and Steel, Tangshan Medium and Heavy Plate, Hebei Xinda Iron and Steel Group, Tangshan Stainless Steel, Tangshan Chunxing Special Steel, Tangshan Jinma Iron and Steel Group, Tangshan Donghua Iron and Steel Enterprise Group (including Kaiheng). They will have to cut emissions by 50 percent from March 20 until June 30, while they will implement emission reductions of 30 percent from July 1 until December 31.
Another 16 steel companies will lower emissions by 30 percent for the whole period from March 20 to December 31.
Steel mills will have to implement the current restrictions on emissions mainly at sintering machines and blast furnaces. Sintering machines above 90 m² and below 100 m² are the focus of the production curbs.
The new restrictions in Tangshan up to the end of the year will definitely reduce iron ore consumption. Today, Friday, March 19, iron ore fines with 62 percent Fe content have lost $6.2/mt to $159.8/mt CFR. Brazilian iron ore with 65 percent Fe is at $186.5/mt CFR, down by $6.1/mt compared to the previous day, SteelOrbis has learned. Trading has been hit hard during the day by the new conditions.
Nevertheless, the situation in the steel market is not clear. Rebar futures have posted a decline today, falling by RMB 35/mt ($5.4/mt) compared to the previous day, but billet prices have continued to rise gradually. After yesterday's increase by RMB 20/mt ($3/mt), mills in Tangshan have increased prices by another RMB 20/mt ($3/mt) to RMB 4,490/mt ($690/mt) ex-works. The spot ex-warehouse prices have added RMB 13/mt ($2/mt), according to SteelOrbis’ information.
The restrictions may also boost HRC prices in the local market in the near future amid expected lower supply volumes.
$1 = RMB 6.5098