China’s top steel city outlines winter output cuts

BEIJING/MANILA: Production cuts ordered for this winter by China’s top steelmaking city Tangshan look less restrictive than last year, analysts said, potentially keeping output high even as the city seeks to fight pollution by cutting smokestack smog.

Based on a list of restrictions detailed in a local government notice issued late on Thursday, the average production cut at mills in the city would come to 30-35 per cent, lower than last year’s 42 per cent, analysts said.

Of the 36 steel producers in Tangshan, 22 were ordered to reduce output by around 30 per cent and nine by 50 per cent, according to the notice. Unlike last year, Beijing has allowed local governments to set their own output curbs this winter.

“From the reduction rate perspective, this year seems to be more lenient than last year,” said Zhao Yu, an analyst at Huatai Futures. “But it is still uncertain if absolute output from steel mills in Tangshan will be bigger (this winter), as the government did not say when exactly the production cuts will be enforced.”

Tangshan said the plan on output restrictions is open to a period of public consultation from October 18-22.

A group of three mills, which failed to upgrade anti-pollution equipment and produce only low-end steel products, were told to slash output by 60 per cent and shut down all sintering machines.