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Chinese steel market has yet to respond to pollution

Keywords: Tags  China steel market, pollution, severe smog, steel response

SHANGHAI — Chinese steelmakers have yet to cut production to reduce emissions amid the recent severe smog spreading across the country’s eastern regions.

The Shanghai Bureau of Environmental Protection released a severe air pollution alert late Dec. 5, and announced that local government would implement several urgent measures that include limiting production and pollutants at industrial enterprises to tackle the situation.

By 5 p.m. Dec. 5 Beijing time, the level of airborne particulate matter 2.5 microns (PM 2.5) and less in diameter, which poses the biggest health risk, reached 235 micrograms per cubic meter, according to the Bureau’s official index.

By Dec. 6, levels had climbed to 448 micrograms per cubic meter, although unofficial gauges put the PM 2.5 density as high as 505 micrograms per cubic meter.

Shanghai-based Baosteel Group Corp. as of Dec. 6 hadn’t been informed about production restrictions yet, a source in Baosteel’s investor relations department told AMM sister publication Steel First.

Meanwhile, a source with Nanjing Iron & Steel Co. Ltd. in neighboring Jiangsu province also told Steel First that he hadn’t heard of any plans to cut production at his mill.

"That hasn’t taken place. I think the pollution problem cannot be so easily solved through a short-term production cut," he said.

Nanjing is among one of the most polluted cities in China. Nanjing Iron & Steel and Meishan Iron & Steel Co. Ltd. could be asked to limit production if the heavy smog continues, according to local media reports late Dec. 5.

"No mill has been involved in emission reduction to tackle the smog so far as I know. I don’t think the steel industry should be blamed too much, as the major air polluters are power generators and petrochemical plants," a Beijing-based analyst said.

Nevertheless, trading activities in the eastern Chinese market have been hampered, as severe smog has disrupted transportation and caused a further lack of momentum in spot prices, according to market sources.

A version of this article was first published in AMM sister publication Steel First.

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