China’s steel market yet to respond to severe pollution gripping east coast

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

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

By 5pm Beijing time on Thursday, the level of airborne particulate matter 2.5 microns and under in diameter – which poses the biggest health risk – reached 235 micrograms per cubic metre, according to the Bureau’s official index.

By 2pm on Friday December 6, levels had climbed to 448 micrograms per cubic metre, although unofficial gauges put PM 2.5 density as high as 505 micrograms per cubic metre.

Shanghai-headquartered Baosteel has not been informed about production restrictions yet, according to a source with Baosteel investor relations department contacted by Steel First.

Meanwhile, a source with Nanjing Iron & Steel 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 amongst one of the most polluted cities in China. Major local steelmaker Nanjing Iron & Steel and Meishan Iron & Steel could be asked to limit production if the heavy smog continues, local media reported on Thursday night.

“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 on the eastern Chinese market has been hampered as severe smog has disrupted transportation, causing spot prices lack momentum to firm up, according to market sources.

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