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However, the overall impact of the tighter monitoring regime is likely to be limited, they added.
The action, led by the Tangshan Environmental Protection agency, was thought to have been inspired by a rash of serious pollution problems that have hit Chinese cities this winter.
The agency is monitoring emissions at 61 steelmakers and 31 coke firms for two months from the end of February. Firms breaching pollution guidelines could face fines, according to local media reports.
“The action would more or less raise mills’ environmental costs, which could force smaller ones to scale back their production,” a Shandong-based analyst said.
The analyst believed some of them would carry out maintenance to escape punishment.
Output in the Tangshan area saw signs of decreasing since last week, while sources attributed it to overall losses, rather than the environmental concerns.
The utilisation rate of steel mills in Tangshan dropped slightly from the previous 98% to 94% last week, an industry analyst said from Beijing.
“This has no impact on us, [although] small mills [that] fail to meet the environmental standard will come under pressure,” a source with Tangshan-based Hebei Steel told Steel First. “So far all the mills are producing as usual.”
“It’s less of an environmental problem in Tangshan. The losses registered forced those smaller mills in the region to cut back production,” a trader in Shanghai said, “So far the cuts were small,” she added.
“The losses seen could range from 50 yuan per tonne to 500 yuan per tonne,” another steel mill source in Shandong said.
A crackdown on illegal emissions from steel mills in Tangshan could force some smaller mills to cut output, market participants said.