IRON and STEEL
China is fighting hard to deal with the rising level of air pollution from coal and steel producing units. After carrying out stringent production cuts and closure of polluting coal and steel units across the country over past two years, various cities in China has also set out their plans for the coming years to have a cleaner environment.
One such city is Tangshan which is located in Hebei province and is counted as China’s top steelmaking city. In July 2018, as a part of its anti-pollution campaign the city has ordered its steel mills to meet new ‘ultra-low’ emissions targets where steel mills are given time until 31 Oct’18 to meet these targets and in case of failure to meet the targets companies will be ordered to shut down. However, the mills that will pass the emission checks before Oct’18 will be exempted from or ordered to implement fewer production during winters in 2019-20.
As per the new norms mills are required to cut the concentration of particulate matters to 10 micrograms per cubic meter from 40 micrograms, while sulphur dioxide and nitrogen oxide concentrations must drop to 35 micrograms from 180 and to 50 micrograms from 300, respectively.
Now with October deadline approaching near, steel mills in Tangshan are rushing to install equipment to meet new ‘ultra-low’ emissions targets. As per the market research, only a handful of mills have installed the technology that removes sulphur, nitrogen and dust and costs up to 200 million yuan (USD 29 million) whereas, until last week, only five of the 152 sintering machines in Tangshan that need to be upgraded have met the stricter emissions targets.
Tangshan Delong Steel Co Ltd, a privately owned mill with annual capacity of 2.4 MnT started work on its upgrade last year and is one of the first to comply with the new standards.
As these upgradation programs require both time and money for implementation, big mills that have started their upgradation program on time will be able to enforce the emission regulations whereas in case of debt-laden producers funding is quite a big obstacle and may eventually result in their closure.
The closure of sintering plants may spur demand for iron ore pellets, adding further upward pressure on prices, which have risen by one third this year. This is because while iron ore fines go through a highly polluting sintering process before they are thrown into the furnace to make steel, higher grade iron ore pellets can go straight into the furnace, avoiding that process.