Market sources report that further steel production reductions are expected in China.
China’s Tangshan regional government had already issued further production reductions and emission restrictions for iron and steel companies on March 19.
Tangshan output reduced by up to 50% by Dec. 31, 2021
Production restrictions are now in place for various steel mills in the Tangshan region until December 31, 2021. Many local companies are now already implementing further environmental protection measures on their own initiative to avoid being hit by further measures. All this has led to a further decline in operating rates for blast furnaces.
- China: Inner Mongolia shuts down blast furnaces, converters and coking plants
- Tangshan: Important steel region in China facing one-year production cut?
- China’s HRC stocks fell further in the week ended March 25
Production down by up to 1 million tons possible
Daily steel output in the region is expected to fall by at least 121,000 mt by June 30. And daily steel output will reduce by at least 97,000 mt in the period to Dec. 31, 2021.
More regions in China soon to be affected by production reductions?
In addition, market sources tell us that other regions in China will follow suit in production reduction. Jiangsu is cited as the most likely region.
The Ministry of Industry and Information Technology said it will introduce stricter capacity replacement measures in the near future. “Steel supply will shrink significantly in the near future,” one analyst wrote in response.
Demand has recovered significantly – construction steel in strong demand
Meanwhile, demand has recovered impressively, with daily trading volumes for construction steel reaching more than 279,000 mt. The positive fundamentals are likely to support steel prices.
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