Posted on 03 June 2020

 

Source: Mysteel Global

Despite a formal government notice circulated in the market on May 30, none of the 21 steel mills in Tangshan of North China’s Hebei province have been carrying out a range of 20%-50% cuts on their sintering, pelletizing and blast furnace capacities as speculated by June 2, local industry sources confirmed.

“The local government has not carried out the curbing strictly, and no local mills will be willing to scale down their production when steel margins are still high,” a local source commented.

The Tangshan government notice on May 30 reportedly requested 21 of the 33 local steel mills with their environmental protection results below the standards to trim their sintering, pelletizing and blast furnace capacities by a range of 20-50% throughout June, as reported.

“We have cut some of our steel production, but I am not sure whether the degree has been as steep as the required 50%,” an official from a local steel mill admitted, adding, “I have not heard other named mills have been complying with the orders as strictly either.”

Steel margins for his steel mills average at over Yuan 400/tonne ($56.1/t), making it even harder for the 21 Tangshan steel mills to self-willingly carry out the cut unless the local authority has been adamant on this.

Mysteel’s latest survey across 32 steel mills in Tangshan showed that as of the morning of June 2, the operational rate of Tangshan’s sintering machines was at 73.7%, up 11.9% from last Thursday, while the operational rate of blast furnaces was 83.2%, down 1.7% in the same comparison.

There is no latest tracking of the capacity utilization rates. As of last Thursday, the utilization rate of 126 blast furnaces in Tangshan’s 33 mills was 88.4%, as reported.   

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