December 14, 2009

80% of Chinese Steel Mills Could Close

Draft regulations posted last week by Beijing's Ministry of Industry and Information Technology recommend closing all steel mills under 1 million metric tons capacity and all specialty steel mills producing under 500,000 metric tons. In addition new environmental requirements will restrict waste water and sulphur dioxide emissions and the amount of coal per ton of steel. It is estimated only 80 of the up to 400 steel mills in China can meet the new regulations. Earlier this year the powerful National Reform and Development Commission decreed that consolidation must occur in China's huge but fragmented steel industry.

If the measures are implemented and successfully enforced it will have wide ranging impacts on global trade and pricing for several industrial commodities including iron ore, coal, nickel, and the export and import of steel products....

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