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China’s shift on winter smog rules rattles steel markets

China will not repeat last year’s blanket production cuts in heavy industries such as steel this winter. Rather, local governments will be given the power to decide how to meet emission targets during the smog-prone winter heating season which runs from November to March. The fear is that China’s steel mills, already operating at elevated run rates, will keep churning out metal over a seasonally weak time for demand. That risks flooding the domestic market, with the ensuing danger of more Chinese steel spilling out to the rest of the world. They have done so in response to Beijing’s simultaneous mass closure of steel capacity and rebooting of demand from the construction sector and its war on smog.

There’s no doubt that last year’s forced curtailments in the 26 cities surrounding Beijing and Tianjin hit national steel output.

Production contracted year-on-year in November and December, according to the National Bureau of Statistics. The official numbers come with the usual caveats but the slowdown from super-charged run rates in the middle of the year was clear.

Compliance was mandatory and there was a demonstrable reduction in particulate pollution across the affected area.
Source : REUTERS

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