China’s energy conservation drive cuts steel output

Lets wait and see if this is really an effective way to save enery, and cut steel production

SBB 2 Sept 2010 Although the Chinese domestic flat steel market remains stagnant due to lack of demand, some market watchers believe the government’s order for mills to control their energy consumption within annual targets will cause China’s steel output to decline from September, which might help boost prices.

Zhejiang province’s Ningbo Iron & Steel has already idled one of its two blast furnaces since 1 September, complying with a provincial government order to rein in energy consumption within its quota. As a result, Ningbo I&S will loss around 170,000 t of HRC production every month from September-December, as Steel Business Briefing reported.

Meanwhile, Jiangsu province has also issued orders relating to energy conservation at flat steel mills in the province such as Shagang and Nanjing Iron & Steel. As a result, Nanjing I&S will lose about 50,000 t of crude steel in September, while Shagang will only able to deliver 40% of the contracted HRC volume to its agents in September. But Shagang’s HRC output reduction is also partly a result of blast furnace damage.

A Guangzhou-based market watcher says so far only Zhejiang, Jiangsu, Hebei and Shanxi have issued energy conservation orders to their local mills. However, if more provinces join in later, China’s steel output might fall in the next few months. So far most of the affected mills are longs steel producers, but some say flat producers may follow.


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