In Changzhou, Jiangsu,some steel mills will suspend operations for 7 to 10 days because they were required to switch from coal to natural gas, resulting from part of the local government's green initiative. Most steel mills in Changzhou had completed upgrades last December. Steel mills in Changzhou, Xuzhou and Wuxi cities saw further impact of the month-long, province-wide environmental inspections in Jiangsu. This round of inspections began in the middle of April. 

At a large-scale steel plant in Changzhou, two blast furnaces of 1500 m³ and 1580 m³ that were under maintenance in earlier this month, resumed production by May 5. The plant is currently operating normally except for a suspended blast furnace of 510 m³ that is undergoing capacity replacement.

Output of 100,000 mt of construction steel is expected to be affected as some steel mills in Wuxi will maintain their rolling lines for 25 days, from May 20. A local steel plant said it had resumed production of its two rebar rolling lines in early May, after three days of maintenance. 

All coke plants across Xuzhou were required to suspend production this week. An estimated 14.5 million mt of coke capacity will be affected. Coke plants in Xuzhou were required to cut 50-70% of output previously. Steel mills in the city remain under full suspension. Although most have already completed rectifications and will resume production after checks by the environmental inspection team, dates of the checks remain unknown. Checks are expected in mid-May. 

In other areas of Jiangsu, most steel mills are operating normally. In the spot market, transactions of rebar picked up in Hangzhou as sellers lowered offers by 10 yuan/mt to 4,040 yuan/mt on the morning of Monday May 7. The average traded price stood at 4,045 yuan/mt on Tuesday May 8, down from the average of 4,050 yuan/mt on May 7. Rebar prices stood firm at 4,310 yuan/mt in Guangzhou on May 7, as several sellers that were eager to destock lowered offers by 20-30 yuan/mt. Transactions in Chongqing was active given low inventories, as rebar prices mostly rose 10-20 yuan/mt from last Friday to 4,300 yuan/mt on May 7. 

It is expected that steel prices to face pressure once environmental restrictions end. The market is further subject to uncertainties from of US-Sino trade, China-North Korea relations and expectations of a rate hike in June by the US Federal Reserve.

• [Editor:Wang Linyan]