Steel Products

China Cracks Down on Winter Pollution

Written by Tim Triplett

November 1, 2017

China is cracking down on air pollution, which worsens during the winter heating season. Chinese steel producers are feeling the pressure from the government to scale back production in the next few months.

Reuters reports that growth in China’s steel industry fell to a six-month low in October as a government crackdown on winter air pollution sent raw materials prices and new orders downward.

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China plans to reduce crude steel production by 33 million metric tons over the winter. Cuts of 30-50 percent in utilization rates at some Chinese steel plants have already begun. While the main driver is the environment, the Chinese steel industry will also improve its cost basis by removing less efficient producers from its steelmaking capacity, reports S&P Global Market Intelligence.

The Chinese central government has committed to reducing its steel capacity by 140 million metric tons by 2021. It claimed 65 million tons in 2016 and has mothballed 42 million tons of a 50-million-ton target so far in 2017, Platts reports, not counting the closure of many illegal and high-polluting induction furnaces.

Tim Triplett

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