Posted on 14 Oct 2019
Steel mills in Hebei province’s Tangshan city have been ordered to continue to cut output at blast furnaces for environmental reasons through October.
The daily pig iron output loss for the remainder of October should be larger than during most of September, but some steel traders doubted the output cuts would be strictly implemented.
Tangshan city government on October 9 ordered 29 of its 32 local steel mills to suspend their blast furnace production capacity by no less than 50% on average over October 10-31. The remaining three mills, namely Shougang Qian’an Iron & Steel, Shougang Jingtang Iron & Steel, and Zongheng Group’s Fengnan steelworks, will be exempted from the curtailments.
S&P Global Platts estimates the average utilization of Tangshan-based blast furnaces will be around 59% during October 10-31, up from 33% over September 28-October 2, but still lower than the 85% utilization rate over September 1-23. The daily pig iron loss over October 10-31 is expected to be 152,000 mt/day.
However, one steel trader pointed out that Tangshan ordered large scale output cuts at blast furnaces in July and August — mostly 30%-50% cuts — but the implementation of these orders turned out to be very poor.
He believed that unless air pollution was extremely serious, output cuts at Tangshan-based blast furnaces will be limited for the remainder of October.
Some traders said supply and demand would be balanced in October, as it was a strong season for the construction sector. However, they were worried that when seasonal demand starts to fall in November, high steel production will weigh on prices.
