The opinion expressed here is the opinion of the columnist of Reuters)
* The steel and aluminum industries hit the main targets of coal * markets where supply prices are difficult to control-
November 21, Beijing, the fog haze of war could will to promote Andy in Hypertonic Sodium Chloride Hydroxyethyl Starch 40 Injection (Andy Home) of the company relocation. Reuters)-
The winter heating season in China is just beginning, and as the entire industrial sector reduces capacity or is completely close to complying with the pollution War of the leadership, it heralds a huge supply chain experiment.
The layoffs will continue in four provinces next to Beijing and Tianjin, and will continue to March.
Coal is the enemy of the public.
1 steel and aluminum industry in China-
Two big users of coalfired power —
Key targets for winter cuts.
Neither department has experienced supply.
Before the side adjustment of this speed and magnitude, the market is difficult to price in expectations.
Even when calculating the scale of the closure, it is still a city and regional task and a potential offset puzzle
, which is further confused by the well-known problematic official production data.
In addition, as far as aluminum is concerned, this is not only a problem for aluminum smelters.
The entire supply chain from petcoke and carbon anode to alumina will also reduce production.
As far as steel is concerned, production cuts must be balanced against the impact on demand for a full blockade of construction activities in the affected areas.
If this is a huge pollution
This is a test in Beijing and a huge pricing test in the global steel and aluminum markets.
But so far, what we know is this. ALUMINIUM -
The sting of raw material tail aluminum smelters and alumina refineries requires a reduction of 30%.
Carbon product suppliers in the smelting sector must cut by 50% if they meet all environmental standards, and if they do not, they must cut all.
CRU researchers expect primary aluminum production to be affected by around 2 million tons, which means production will be reduced by nearly 840,000 tons in 2017 and 2018. (
On November, the price of anode and petroleum coke was heated in winter policy \". 20, 2017)
AZ China, which focuses on the aluminum industry in China, estimates, 1.
57 million tons of primary production capacity will be affected, but it should be noted that the implementation work is not perfect, and the capacity closure confirmed so far is only about 840,000 tons. (
Winter shopping guide for November. 20, 2017).
Although Henan has expanded the scope of production cuts from the initially designated cities to the province, Shandong seems to be dragging the bureaucratic steps.
Binzhou authorities in Shandong province have allowed the world\'s largest producer, the Hongqiao Group, to count \"illegal\" pottery that had been closed during the winter contraction.
This kindness seems to be a factor in the sharp decline in Shanghai prices to about 15,000 yuan per ton this week, despite the news of recycling, which highlights the official unclear.
Further up the production chain, 5.
AZ China says 32 million tons of alumina production will be affected.
The confirmed closure is much lower than this figure, but the alumina refinery can be closed faster than the smelter, which means that many operators will maximize their output by mid-term
Deadline for November
CRU and AZ China expect the supply of calcined coke and carbon anode to be severely disrupted, with shortages in the domestic market leading to increased price volatility.
China is the main supplier of the two products of smelters in other parts of the world. This year, exports have shown a downward trend, supply has decreased and prices have risen. These often-
Negligible input to aluminum
China\'s smog problem may also be a problem for everyone else. STEEL -
Not only is the production department trying to calculate the impact of the winter heating season on the steel industry, because there are more moving parts, which is more problematic.
Manufacturing facilities need to shut down 50% capacity, and this \"hot metal\" will be converted into lower crude steel production. CRU’s base-
The Case scenario envisages a loss of 66 million tons of \"hot metal\" production in winter, but in the unaffected areas of the country, higher production has an important offset, increased scrap usage, and reduced inventory of existing steel. (
On November, \"Steel prices increased by winter production cuts \". 21, 2017)
After incorporating these factors into the equation, the supply of steel products will be affected by a net 14 million tons from now until now.
Wood Mackenzie\'s analysts also did the same and came up with 4 million tons in the fourth quarter.
Supply, however, is only part of it.
A key difference between aluminum and steel is the main use of the latter in the construction industry.
Ho Ming, senior consulting manager at Wood Mackenzie, said all construction activities in Beijing, Tianjin and Hebei provinces had stopped.
Demand reached 9.
Wood McKenzie said that 6 million tons will exceed the supply this quarter, putting pressure on steel prices.
CRU thinks there will still be 1-
The tightening of 2 million tons throughout the season led to higher prices.
In the context of China\'s steel production of more than 0. 8 billion tons last year, these figures may seem insignificant.
But the potential impact on profit margins and prices is much greater because, according to the CRU, \"all parts of the supply chain are stretched to barely meet market demand \".
The important background here is a large number of \"illegal\" steel.
Capacity shut down in China over the past two years.
This helps improve the utilization rate of the entire official sector, and there is little room to increase production outside of smog --zone regions.
The scope of the steel scene is indeed very wide, but there are also some core early harvest.
The winter heating season will curb iron ore demand and have a negative impact on prices, but will boost scrap demand and have a positive impact on prices.
Foreign trade export stainless steel products has lower than 30% 2016 rate should be further decreased.
Assessing the impact of winter heating on steel and aluminum is largely an ongoing work, so it is expected that there will be multiple updates in the coming months, as well as a lot of recycling and new news.
Official production data will be carefully studied, but these data have proven unreliable in the past.
But if there is an undeniable and difficult fact in all of these uncertainties, it is Beijing\'s commitment to do everything it can to deliver on President Xi\'s \"Blue Sky\" commitment.
The smog war has just begun and may last for a long time.
If this is the case, there may be further
Profound impact on steel and aluminum supply chains.
First, Hongqiao is already considering transferring its aluminum capacity to Indonesia.
This may not be the only Chinese company to reassess its long-term performance. term future. (
Editor David Goodman)
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