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The 2022 Winter Olympics will be held in Beijing and Hebei Zhangjiakou February 4-20.
“Steel mills ranking D grade in Tangshan are required to stop production from mid-January to mid-March, and a few other mills in Hebei were heard to be suspending production one month ahead of the Winter Olympics,” an industry analyst said.
But, he added, none of that news has been confirmed by local governments or steel mills.
Tangshan once had 15 grade D steel mills, but it changed 10 of those to grade C, leaving only five mills at grade D on November 29, a local industry information provider said.
The analyst estimated that the five mills account for 15% of the total crude steel capacity of the city.
“I don’t think these mills will totally stop production for the Winter Olympics. If so, steel prices will skyrocket, which is not what the Ministry of Industry and Information Technology wants to happen. These mills may be required to reduce production by a large amount, like 50%,” the analyst said.
Some mills in Tangshan said they did not receive any notice about production restrictions for the Winter Olympics.
“According to past experience ahead of big events, mills’ production rates will decrease before February for better air quality, especially in Tangshan, which is near both Beijing and Zhangjiakou,” a source at a Tangshan mill said. “But it will not break the balance of supply and demand because it’s the Chinese New Year holiday then.”
Chinese New Year will be celebrated from January 31 to February 6 in 2022.
“The holiday will lower the demand for steel products, and winter is a weak season for steel demand, especially in Northern China, due to the low temperatures,” a trader based in Beijing said.
The analyst, the trader and the mill source all said that given the possible production restrictions, they don’t think steel prices will change greatly.
But some other market participants said they expect prices will be pushed up by the production cuts.
“Steel prices picked up last week on participants’ conjectures about production cuts,” a second trader in Eastern China said.
For instance, Fastmarkets’ price assessment for steel reinforcing bar (rebar) domestic, ex-whs Northern China was 4,650-4,700 yuan ($727-746) per tonne on Friday November 26, up by 210-220 yuan per tonne from a week earlier.
“The news (about production cuts) is speculation material for steel market participants no matter whether it will bring actual output changes or how much it will cause output decreases,” the second trader said.