Pollution woes hamper operation recovery at north China steel mills

Excessive pollution and governmental pressure hampered operation recovery across steel mills in north China as the heating season ended on March 15, SMM research found.20160517_钢铁_01

In Tangshan, some mills that provided heating supplies continued to operate throughout winter and will only resume full operation on April 25. The delayed resumption will offset the emissions that these mills produced during the heating season. Complete resumption of operations in Tangshan is likely only in the second half of April due to restrictions for environmental protection.

Mills in Wu’an have ramped up operations since April 1 but output remains at 50-55% due to environmental concerns.Output may be further affected if authorities implement output cuts for the non-heating season.

Operations at mills in Anyang are expected to return to normal in mid-April. Growth in inventories will be limited in the short term given air pollution restrictions on mills during March 31-April 2.

Spot prices of hot-rolled steel in the major markets climbed 20-80 yuan/mt on Monday April 2, with weaker trading in south China. Buyers in the south and east held back from ordering as there were no significant price spreads between cargoes in the north and south. Most cargoes were consumed by local consumers. Transactions at lows were actively heard in Tianjin and Shanghai, while trading was thin in Lecong in the south with high inventories.

As demand recovers, SMM expects spot prices of hot-rolled steel to rebound from lows but to remain rangebound in the short term given macroeconomic volatility.

Source: SMM