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Ahead of winter, Chinese steel mills rush to meet stricter smog rules

Steel mills in Tangshan, China’s top steelmaking city, are rushing to install equipment to meet new ‘ultra-low’ emissions targets by an Oct. 31 deadline, as the measures to battle pollution threaten more upheaval in the debt-laden sector.

Only a handful of mills have installed the technology that removes sulphur, nitrogen and dust and costs up to 200 million yuan (22 million pounds), according to analysts who have tracked the more than 150 sintering plants in the city affected by the new rules, which were only announced in July.

“Everyone is trying to speed up the (upgrade) project … Still, time is very tight,” said an environmental manager at Hebei Donghai Special Steel Co, a privately owned mill with annual capacity of 10 million tonnes. She declined to be named as she is not authorised to talk to media.

The environment ministry said in February it would enforce tough new emissions on steel mills, but did not give details.

In July, the Tangshan city government ordered companies in the steel, coke and coal-fired power sectors to comply with the new standards and gave mills until end-October to meet the targets.

Until last week, only five of the 152 sintering machines in Tangshan that need to be upgraded have met the stricter emissions targets, according to research by analysts at Huatai Futures and Guosen Securities.

Much is at stake for mills. Those that comply with the restrictions in time will be exempt from curbs to output during the winter heating season.

If they miss the deadline, they will have to cut output and the government has warned that some sintering plants may be shut down.

This is the second year that China will force steel mills, aluminium smelters and other heavy industry in the smoggiest northern regions to cut output during winter to counter a rise in emissions from the country’s coal-fired power stations due to increased demand for heating.

Tangshan Delong Steel Co Ltd, a privately owned mill with annual capacity of 2.4 million tonnes, started work on its upgrade last year and is one of the first to comply with the new standards.

“It takes time to install and test the devices,” said Kan Ruimin, manager at the engineering department.

Mills must cut the concentration of particulate matters to 10 micrograms per cubic metre from 40 micrograms, while sulphur dioxide and nitrogen oxide concentrations must drop to 35 micrograms from 180 and to 50 micrograms from 300, respectively.

“Big mills are enforcing the emission regulations, but for some debt-laden producers, funding is a big obstacle,” said Zhao Yu, steel analyst at Huatai Futures.

Closures of sintering plants will likely spur demand for iron ore pellets, adding further upwards pressure on prices, which have risen a third this year, Zhao said.

Iron ore fines go through a highly pollutive sintering process before they are thrown into the furnace to make steel. Higher grade iron ore pellets can go straight into the furnace, avoiding that process.

Source: Reuters

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