Reducing the extreme levels of air pollution in China has moved to the top of the political agenda for the new government this year. Without reform, China’s air pollution could worsen by another 70% in 2015. Construction and industrial emissions contribute approximately 20% of particle matters (as measured by PM2.5). We expect measures to address this crisis may have important implications for industrial sector activity. In fact, the forthcoming power rationing in Hebei province highlights that provincial governments may step up their effort to tackle pollution crisis.
According to Bloomberg, Tangshan city will shut 199 polluting factories by rationing their power supply from May 20th. Power supply for three ore-sintering lines at Tangshan Steel and two at Guofeng Steel will be cut. Operations won’t be resumed until desulfurizing devices are added to satisfy environmental standards. Furthermore, outdated, unlicensed and illegal facilities in Tangshan will also be closed by May 31st. If these measures are implemented strictly, we expect this could support steel prices while depress iron ore demand.
Chinese authorities have sought to appease public anger after smog in Beijing hit hazardous levels in January. Pollution has surpassed land disputes as the biggest cause of protests in China, Chen Jiping, a former leading member of the Communist Party’s Committee of Political and Legislative Affairs, said in March.
Related FAQ: What is PM2.5 ? Click here to find out