China's early winter smelter cuts boost prospects for "blue sky" Congress

Reuters News
Posted: Sep 29, 2017 6:18 AM

By Tom Daly

BEIJING (Reuters) - Chinese steel makers and aluminium smelters are closing some production starting next month to meet strict air quality standards for the winter.

But, some analysts believe part of the reason for the October closures, which come before the major heating season begins in mid-November, is to clean the air in the capital of Beijing ahead of the once-in-five-years 19th Party Congress, beginning on Oct. 18.

China's Ministry of Environmental Protection (MEP) released its 2017/18 "battle plan" in August which outlined pollution control measures in 28 northern cities over six months from October to March. Smog typically builds up during that time as coal-fired boilers heat homes and offices, adding to air pollution from factories and mills.

China wants to avoid images of its notorious choking smog and show Beijing in clear skies, the analysts said. Officials attending the Congress from the smog-prone provinces of Hebei, which surrounds Beijing, Shanxi, Shandong and Henan are wary of failing to meet the MEP's air quality targets.

The city of Handan in Hebei, a top steel-making province, ordered 50 percent restrictions on blast furnaces to begin on Oct. 1 until March. Zhengzhou, capital of Henan province and south of Hebei, ordered blast furnaces to cut production by 50 percent during the heating season and put restrictions on other types of steel furnaces.

"Certainly I think the Party congress ... may be a factor" behind pollution control from October, said Helen Lau, an analyst at Argonaut Securities.

Aluminium smelters in the 28 cities must close 30 percent of their pots during winter, said Paul Adkins, managing director of consultancy AZ China.

The timing of the closures varies, Adkins said. "In Shanxi and Henan provinces, shutdowns are starting from October 1, but we think this is because of the 19th Party Congress," he said.

China takes its hosting of major events very seriously, even at the expense of its economy. In the run-up to the Asia-Pacific Economic Cooperation leaders' conference in Beijing in November 2014, it shut thousands of factories and restricted traffic.

The moves paid off with the clear skies on show giving rise to the term "APEC blue."

(Reporting by Tom Daly; additional reporting by David Stanway in SHANGHAI)