China’s biggest steelmaking hub Tangshan, located in the Hebei province says it no longer plans to limit steel output. Instead, it is taking a three prong approach likely to be replicated nationwide, to keep steel industry on path with decarbonization. Reducing limits, output is set to rise in the short term within the next months, weighing on prices. China’s crude steel output is set to reach close to 2.9 MMT/day in March. This figure remains lower than March 2021 of 3 MMT/day, but higher than the output levels seen in Jan-Feb 2022 period.

However, long term developments in Tangshan are shifting to encourage steel mills to develop grade A level environmental output. So far four steel mills have reached grade A standard. These have a combined crude capacity of 48 MMT/day, or 37% of Tangshan’s total crude steel capacity.

Under the same plan, local mills are required to undergo facility upgrades that will see 16.7 MMT/year of new crude steel production capacity commissioned in 2022, predicated on the closure of 20.4 MMT/year of existing crude steel capacity, hence resulting in a net decrease of 4 MMT/year.

New facilities take several months to begin operations, while old facilities must shut down by the end of the year; negatively impacting Tangshan’s crude steel production.