Jiangsu steel mills to move to coast

Iron ore futures slip as govt curbs weigh

East China’s Jiangsu Province, the country’s second-largest steelmaking province, will require steel mills to move to two new areas on the coast in the next few years, according to a provincial government document, to reduce air pollution and to make the industry more efficient.

After years of getting rid of outdated excess capacity, the latest measures are the next front in the government’s long-term effort to upgrade and streamline its smokestack industries.

The province plans to create two steelmaking hubs focusing on highquality steel production, and to relocate steel mills through merger and capacity trading, the document said.

The plan was distributed on Tuesday by the Jiangsu government and reviewed by Reuters on Wednesday. The provincial government declined to comment.

The move is similar to the plan outlined by North China’s Hebei Province, the country’s top steel producing province, earlier this year.

In its document, Jiangsu explicitly ordered the city of Xuzhou to cut the number of steel mills in the city to under 10 by the end of 2018 from 18 currently and consolidate the remaining into one to two companies by 2020. In April, at least three steel mills were ordered to close in Xuzhou.

Small steel mills and coke plants near the Yangtze river and Tai Lake region will be eliminated by 2020.

Chinese iron ore futures dropped for a fifth session in six on Wednesday, hitting their lowest in one-and-ahalf weeks amid worries demand for the steelmaking raw material will be curbed by restrictions on steel output in the country.

While appetite for high-grade iron ore remains strongly in line with China’s drive against pollution, demand for lower grade material has stayed weak, traders said.

The most traded January iron ore on the Dalian Commodity Exchange initially hit a session-low of 500 yuan ($72.44), its weakest since August 6.

China’s iron ore imports rose 8 percent from June to 89.96 million tons in July.