China's Handan orders 25 percent steel production cut from April 1

2 April 2018

China’s city of Handan has ordered steel mills to cut production by around 25 percent as part of new measures to curb pollution from April to mid-November, according to a statement on Friday.

The city, in China’s Hebei province that surrounds Beijing, has also told its coking industry to reduce output by 25 percent over that period, while power and cement firms must cut production by around 20 percent, the statement on the Hebei government website said. Ceramics and glass sectors were ordered to cut production by about 15 percent.

Handan will also strengthen oversight of emissions from heavy-load vehicles, the statement added.

Shanghai rebar prices on Friday finished 4.4 percent higher at 3,391 yuan ($541.01) per ton after the Handan announcement, while steelmaking raw materials coking coal and coke ended up 5.8 percent and 3.4 percent, respectively, on the Dalian Commodity Exchange.

Handan has an annual steelmaking capacity of about 113 million tonnes, according to consultancy Wood Mackenzie. It is a heavily polluted steel hub and the only city in Hebei to see a rise in concentrations in 2017 of particulate matter 2.5 microns (PM2.5) in size, pollution that penetrates deep into people’s lungs.

City officials have promised to “rectify” mistakes after being summoned to meet provincial authorities to discuss Handan’s failures on Thursday, according to a report in the official Hebei Daily newspaper on Friday.

The announcement of the new measures comes shortly after the end of northern China’s winter heating season on March 15 and they are set to run until the start of the 2018/19 winter heating season on Nov. 15.

China’s biggest steel-producing city, Tangshan, also in Hebei, earlier this month decided to extend production restrictions on steel mills beyond the end of the heating season.

Hebei province, which produces nearly a quarter of China’s steel, said at the beginning of this month it would set up an air quality punishment and reward system for its cities, counties and districts.

A separate document on the Hebei government website, dated March 20, said recent environmental inspections in the province had led to six iron and steel enterprises having to close some of their facilities after their emissions permits were revoked.

A further 113 companies have been given three months to rectify violations uncovered by the inspection teams and may only operate at 50 percent of production capacity during that time, according to the document.