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China Power Cuts to Trim Steel Output, Lift Prices
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News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News". |
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2 Sep 2010
Power restrictions by local governments in China, the biggest steelmaking nation, may lead to the suspension of 25 million metric tons of annual steel capacity, helping boost prices, Credit Suisse Group AG said
Disruption to steel production has started as local governments rush to
meet year-end power efficiency targets, Trina Chen, a Credit Suisse
analyst, said today in a note. The suspended capacity includes a
Baosteel Group Corp. blast furnace in Ningbo, she said.
Slowing demand has led about 40 percent of steelmakers in the country to
idle plants or put them on maintenance, the China Iron and Steel
Association said Aug. 3. China’s steel output dropped by 3.9 percent to
51.7 million tons in July from a month ago, posting a five-month low.
The production cuts “should have positive impact on the fourth-quarter
steel prices, as it combines with the industry production cut in
July-August,” Chen said in the report.
Steel prices in China gained 1 percent this week to 4,217 yuan ($619) a
ton yesterday. Prices fell 1.9 percent last week, the first drop in six,
amid concerns slowing economic growth may curb demand, according to the
researcher Beijing Antaike Information Development Co.
Production cuts at steelmakers may hurt demand for iron ore, curbing
prices. The 62 percent-iron ore arriving at China’s Tianjing Port has
dropped 0.8 percent this week to $141.8 a ton yesterday, according to
the Steel Index.
Baosteel’s Ningbo unit will shut a 2 million ton-a-year furnace for more
than three months from Sept. 1 as the city government aims to achieve
its energy-saving target, Ningbo Radio reported on its website, citing
Huang Ming, deputy head of operation planning at the unit. The plant
would lose 180,000 tons of output a month, Huang was cited as saying.
Zhang Wei, a public-relations official at Baosteel, confirmed the report.
Source: Bloomberg
