China's winter steel output cuts down 76% on year, impact on Q4 output seen slight

Further, the output cuts had not been implemented at most local mills in the two cities as of Oct. 20, market participants told Platts.

As a result, the restrictions are unlikely to have a big impact on China's steel production levels in the fourth quarter, particularly as they have not been strictly implemented or adhered to.

Market sources said pig iron and crude steel production would continue hovering at high levels in Q4, putting downward pressure on Chinese steel prices.

According to the output cut measures announced by Handan city, local mills were ordered to suspend about 29% of their pig iron making capacity, or 2.29 million mt, from Oct.1 to Dec. 31. This is lower than the 45%-50% capacity suspension that was actually carried out over the same period in 2019, which resulted in a pig iron output loss of about 3.63 million mt, Platts calculations showed.

Tangshan city announced its winter output cuts in early October, with orders to suspend 1.99 million mt of pig iron capacity over October-December. Tangshan ordered pig iron suspensions of 13.97 million mt over the same period last year, but the move was poorly implemented.