China imposes steel output reductions due to strong stance on emission controls

China Tangshan’s local government on March 19 issued a notice requiring seven steelmakers in Tangshan to lower production to achieve a 50% reduction in emissions over March 20-June 30 and a 30% reduction over July 1-December 31.

Another 16 steel mills are required to cut emissions by 30% from March 20 to December 31. With China adopting a strong stance on emission controls and imposing steel output reductions, Chinese domestic steel prices are likely to firm up further.

Moreover, during a recent meeting of China Iron and Steel Association, China’s steel makers predicted a sharp ramp up in activity in China’s construction industry in April-June period, as well as a drive by manufacturers to stock up on steel products supporting elevated steel prices.

It is quite likely that Chinese steel mills & traders could resort to imports of semis and HR adding more fuel to already high steel prices globally.

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