International Steel Prices
November 11, 2017
China's "2+26" Policy to Impact Steel Prices
Written by Tim Triplett
Chinese steelmakers in the heavily industrial “2+26” region—Beijing, Tianjin and the 26 surrounding cities—are expected to cut steel production by 34 million tons this winter under government guidelines designed to reduce air pollution during the home-heating months.
Analysts at Wood Mackenzie estimate the government restrictions will reduce China’s hot metal supply by about 14.2 million tons in the fourth quarter and by 20.2 million tons in first-quarter 2018. The environment is unlikely to see the full benefit of a 34-million-ton cut in steel production, however. Mills outside of the 2+26 region, which account for two-thirds of the nation’s steel capacity, are expected to hike production, offsetting the net benefit to China’s air quality. Wood Mackenzie estimates actual steel curtailment will total only about 4 million tons in Q4 2017.
