According to various sources, the important steel region of Tangshan may be facing a one-year production cut. The background to this is the extreme environmental pollution caused by steel production in the region.
23 steel mills in Tangshan, China, affected
The production cuts imposed by the local government appear to affect the operations of 23 steel mills that have violated environmental regulations. The announcement sent iron ore futures lower. In contrast, hot-rolled coil (HRC) futures gained, driven by the announcement.
Measures likely to lead to significant tightening in steel supply
This unprecedented measure by the provincial government is expected to reduce steel output by over 100,000 tons per day. It will also have a significant impact on raw material demand in 2021.
Fastmarkets and Argus have published detailed articles on this topic:
What is the possible background?
We ourselves have been keeping an eye on developments in Tangshan in recent weeks. The measures there seem to be part of the Chinese governments’ plan to further consolidate the steel sector. This involves taking old and dirty blast furnaces off the grid and clearing the way for the rise of the state-controlled stainless steel producer TISCO and its parent company BAOWU Steel Group, for example.
- Chinese iron ore futures fall on Tangshan restrictions, steel resilient on firm demand
- Fear of TISCO? 18 million tons of stainless steel output in planning
- China restricts steel production – what measures come next?
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