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China To Temporarily Pull Back On Steel Production
08/03/2015 - China's steel mills are expected to curtail production this month and in September. The reason: the government wants to curb air emissions around the time of two big public events, according to a Bloomberg report.
According to Bloomberg, Beijing-area mills are under orders to reduce output to ensure cleaner air and clearer skies for world track and field championships, set for Aug. 22 to Aug. 30, and for a Tiananmen Square parade on Sept. 3. The parade is being held to commemorate the 70th anniversary of Japan’s surrender in World War II.
Xu Xiangchun, chief analyst at Mysteel Research, told Bloomberg that as much as 6 million metric tons may be cut, more than amount of production lost under similar curbs imposed for a global summit in 2014.
"Almost all the steel mills will be hit in Hebei, Beijing and Tianjin,” Xu said.
The curbs could generate volatility in iron-ore prices, Macquarie Group Ltd. said in a report, noting that China's steel demand is contracting in as growth decelerates, lowering prices and reducing profitability of the mills.
The report drew parallels between the plan, which it dubbed “Parade Blue,” and the curbs imposed for last year’s Asia-Pacific Economic Cooperation summit.
China is the world's largest steel producer, and production curtailments will weaken iron ore demand, perhaps causing ore prices to fall, Xu Ke, an analyst at Huatai Great Wall Futures Co. in Shanghai, told Bloomberg. “Iron ore hasn’t been performing well this year, so the reduction in steel production will worsen the outlook.”
Xu Xiangchun, chief analyst at Mysteel Research, told Bloomberg that as much as 6 million metric tons may be cut, more than amount of production lost under similar curbs imposed for a global summit in 2014.
"Almost all the steel mills will be hit in Hebei, Beijing and Tianjin,” Xu said.
The curbs could generate volatility in iron-ore prices, Macquarie Group Ltd. said in a report, noting that China's steel demand is contracting in as growth decelerates, lowering prices and reducing profitability of the mills.
The report drew parallels between the plan, which it dubbed “Parade Blue,” and the curbs imposed for last year’s Asia-Pacific Economic Cooperation summit.
China is the world's largest steel producer, and production curtailments will weaken iron ore demand, perhaps causing ore prices to fall, Xu Ke, an analyst at Huatai Great Wall Futures Co. in Shanghai, told Bloomberg. “Iron ore hasn’t been performing well this year, so the reduction in steel production will worsen the outlook.”
