SHANGHAI – China’s top steel-making city is imposing further production cuts beyond the winter heating season as the nation presses ahead with a campaign for cleaner skies that has rattled steel and iron-ore markets.
Tangshan City, the country’s steel-producing hub, has ordered a two-tier system of restrictions that will last from March 16 through November 14, according to a statement on the website of the city’s branch of the National Development and Reform Commission, China’s top planning body. Mills closest to the city centre will have to halt 15% of capacity, while the remainder will need to idle 10% or 15%.
While the stoppages affect less than 1% of national capacity, Tangshan’s move signals the government’s intent to prioritise clean air over industrial output, said Yu Chen, a Shanghai-based analyst with Mysteel Research.
“It’s more about possible future measures to idle more plants in other parts of the country if air pollution gets severe,” said Yu. The order would idle steel capacity of 9.875-million metric tons, compared with 1.05-billion tons of total capacity in China, according to Yu.
The output limits aim at continuing improvements to air quality, and show the city’s “determination to win the battle for blue skies,” Tangshan NDRC said.
Hebei province, together with several other areas of northern China, ordered cuts of as much as 50% on steel production during the winter heating season ending March 15. The unprecedented steps to reduce heavy pollution in the region tightened supplies of steel, boosting prices, and increased the cost of iron-ore as mills sought more efficient higher-quality grades.