July 25, 2008

China to close down 42 small companies during Olympic

21st Century Business Herald quoted Mr Jianlong executive of Tangshan Steel as saying that Hebei provincial government has already convened a meeting to discuss the output reduction and 42 small companies from steel, cement, glasses sector are to be shut down during the Olympic Games.

In Tangshan alone, 6 mills will be required to halt production for 1 or 2 months around the Olympics, including Tangshan Stainless Steel, Tangshan Xingye Industrial & Trade Group, Tangshan Hangu Steel, Tangshan Ganglu Steel, Tangshan Ruifeng Steel Group and Tangshan Jianlong Industrial.

However, the authority has yet to give a clear voice to relieve market concerns, like who will be ordered to suspend production, how the environmental assessment will proceed and to what extent will that impact on steel output nearby Beijing. A host of smaller mills have heard verbal request to limit production during the Olympics, and the authority might cut power or water supply and even resort to administrative measures against them in a bid to impose control on steel output.

However, Mr Luo Bingsheng vice secretary general of China Iron & Steel Association, noted that the output cut on mills around Beijing would be too trivial to impact the fundamental supply and demand.

Market analysts estimate that pig iron output from Shougang and six would be affected mills in Tangshan adds up to 1.98 million tonnes per month, representing 19% of the combined production in Hebei, Beijing and Tianjin, and 5% of China’s total output.

They also suggest that Beijing might take advantage of the Games to wield more over the fragmented steel sector and accelerate the industrial consolidation. The central government hopes to lift up the production ratio of leading steel mills in North China from 40% to 50% to 70% in coming years.

(Sourced from MySteel.net)