Tangshan city, a steelmaking hub in northern China's Hebei province, has told its mills to cut production in June by the same level as that of winter heating season, which means that most of these steel mills' output cuts in June would be around 39.3%.
However, not all of these mills will have their output cut by such an amount, as some will be subject to higher cuts of 53% to 60%
Steel mills in the Tangshan districts of Lubei, Kaiping, Guye, Fengnan, Qian'an, Luanzhou and Luannan have been ordered to lower their capacity utilization rates at blast furnaces and converters in June to the same levels as during the winter heating season of mid-November to mid-March, which was around 39.3%.
Another five steel mills, with better environmental protection records, will reduce their production rates by 20% in June, the same level as in May.
Tangshan has exempted eight mills, with a combined capacity of 23.3 million mt/year, from the output cuts in June as they are in the process of relocating to rural areas.
Steel traders are concerned that looser restrictions on steel output will put further pressure on prices in June, which is a seasonally slow period for construction demand due to wet weather in parts of China.
However, one steel market watcher said the looser output cuts in Tangshan in June may not have a big impact on steel supply as orders for a cut in output in May were not strictly implemented. He said most steel mills, especially those producing long steel products, had already reached full capacity in May, so there was limited scope for further output increases.
However, in the long run, China's steel production has not yet reached its peak, as iron and steel making capacity is creeping up again.
