Tangshan, China's top steelmaking hub in Hebei province, issued an orange-coded alert forcing local steel mills to cut production in response to expected heavy air pollution, according to a government notice on February 22.
The notice said the city will enforce mandatory emission-cut measures on 23 steel mills, as well as companies in coking, cement, blast furnace casting, independent rolling industries. The alert started February 23 until further notice.
China has a three-tier, color-coded air pollution warning system, with red representing the most severe weather, followed by orange and yellow.
These 23 steelmakers, including Tangshan Wenfeng Special Steel, Tangshan Donghua Iron and Steel and Tangshan Donghai Iron and Steel, are asked to lower or ceased production based on B-, C, D grades set by their emission volumes.
Production at hot and cold rolled companies will be suspended over the period.
Coking plants graded B on environmental status should prolong coking time to 30 hours, C-graded plants to 36 hours and D-graded to 46 hours, while A-graded plants can cut capacity by their own choices.
In the cement industry, B- and C-graded enterprises should cut 40% of capacity over the alerting period, while D-graded should cease production.
The anti-air pollution measures strengthened after the city issued similar measures on February 19, when 18 steelmakers were asked to cut production.
The production cut in Tangshan catalyzed the rise in the steel market. The rebar futures saw a comprehensive rise in all contracts on February 24, with the most-traded May contract up 66 yuan/t to 4,618 yuan/t at close. The coke futures rose 4.5 yuan/t to close at 2,578.5 yuan/t.
With supports of iron ore and coke prices and good expectation of demand in the coming busy months, finished steel prices have been rising continuously since the lunar holiday ended.
As of February 23, the spot prices of rebar (HRB 400, 20mm) and HRC (4.75 mm) in major cities averaged 4,682 yuan/t and 4,858 yuan/t, respectively, up 324 yuan/t and 342 yuan/t from pre-holiday levels.
(Writing by Alex Guo Editing by Harry Huo)
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