Fresh production cuts across local steel mills in Changzhou, Jiangsu province will affect daily pig iron output of some 22,800 mt. Local authorities introduced a new round of cuts on Wednesday July 25 to fight severe air pollution.
This will affect daily rebar output of 19,800 mt, we calculated from the required cut imposed on each plant. There is likely to be upward room in rebar prices in the short run, given firm downstream demand currently.
At Zenith Steel, two blast furnaces of 510 m³, one of 660 m³, and one of 1580 m³, were suspended from July 25. Other blast furnaces at the plant will cut production by 20%. Sintering machines were required to halve production. Two rebar rolling lines and a one wire rod rolling line were also suspended.
Production of blast furnaces and sintering machines was cut by 50% at Jiangsu Shente Iron and Steel, and Dongfang Special Steel. Several steel rolling mills in Liyang of Changzhou are also likely to cut production by 50%.
This round of cuts is expected to have limited impact on Zenith and Shente as they have undergone months of recurring suspensions. For local steel rolling mills, however, cuts are likely to have significant impact.
It is unclear when restrictions will be lifted, and production cuts in Jiangsu are likely to be a regular occurrence, we learned.