An update from the air separation industry, 20180813: The long road to reduced steel production

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The long road to reducing steel production: Steel mills are major clients of air separation plants. Whether reducing production is a good thing or not will become clear over time~~ Hehe~~ In 2016, China made efforts to reduce inventory in the steel industry, setting an annual production reduction target of 45 million tons. According to statistics, by the end of July, only 38% of the annual target had been achieved in the steel industry, and 47% in the coal industry – so the path toward reducing production is still very long. 　　To achieve the annual production reduction target, **the environmental protection team’s inspections and various production restriction policies are all in active operation. According to **statistics bureau data, China’s crude steel production in the first half of 2016 was 400 million tons, a 1.1% decline compared to the previous year** ； The output of pig iron was 345 million tons, a 2.1% decrease on a year-on-year basis ； Steel production reached 560 million tons, a 1.1% increase on a year-on-year basis. In June 2016, the national crude steel production was 69.469 million tons, representing a year-on-year increase of 1.7% ； The output of pig iron was 59.744 million tons, a 1.8% increase on a year-on-year basis ； Steel production amounted to 100.715 million tons, a year-on-year increase of 3.2%. It is worth noting that, according to data released by the **Statistics Bureau, China’s average daily output of crude steel in June reached a record high of 2.3157 million tons. Meanwhile, in June, China’s monthly steel production exceeded 100 million tons for the first time, reaching 100.72 million tons, a significant increase of 3.2% on a year-on-year basis. The total steel production in the first six months reached 559.92 million tons, a 1.1% increase on a year-on-year basis. 　　Looking back at June, Tangshan in Hebei Province, which is one of China’s main hubs for crude steel production, was in a period of production and traffic restrictions. According to the regulations, blast furnaces had to be shut down for extended periods, and due to these traffic restrictions, there was also a decrease in the shipment of steel billets. Logically, in June, the blast furnaces at local steel mills in the Tangshan area were shut down for extended periods, and it also took some time to restore the temperature inside the furnaces after they were restarted. So why did the average daily output of crude steel, as well as the overall output of steel products, reach new highs in June? 　　According to Zhuochuang Information, with the implementation of production restriction policies in the steel industry, speculation in various markets has gradually intensified. Steel prices rose significantly in 2016 compared to 2015, which in turn boosted the enthusiasm of steel mills to produce more. Some steel companies that had ceased operations began to resume large-scale production, mainly in the Tangshan area, such as Ganglu and Fengming. Among them, Fengming mainly produces galvanized products with a production capacity of 80,000 tons per month, while Ganglu is involved in both the hot-rolled finished steel products and billet industries. Therefore, although the production capacity of steel mills has declined overall, the resumption of operations by some mills has led to an increase in total resources, which in turn has resulted in an rise in the production of crude steel and finished steel products. Fundamentally, **the implementation of production restriction policies is aimed at addressing the current oversupply situation in the steel market. The price rebound at the beginning of the year indicates that these restrictions have had a positive effect. However, as prices rise, the resumption of operations by steel mills represents a significant issue that must be taken into account; it is therefore necessary to introduce relevant policies to restrict those companies that are less competitive, so as to ensure the stable development of the better-performing enterprises.**