The Chinese government has ordered major steel producers in China to cut production significantly and keep it at 2020 levels. For many steelmakers this means cutting monthly production by 20 to 30% or even shutting down entire blast furnaces. In the United States, the main North American stainless steel producer NAS is declaring force majeure due to supply difficulties for industrial gases. And on the SHFE, stainless steel futures are up as much as 4%.
Due to the steel and stainless steel production freezes announced in China, steel and stainless steel futures are picking up. Spot prices for Chinese stainless steel are also up as much as 4% today, Monday, July 12, 2021.
Nickel had already gained 2.4% on Friday, July 9, 2021, closing at US$18.769 per ton, a level not seen since late February.
According to Chinese media on Monday, the Chinese government has ordered major steel mills nationwide to either reduce or stop production altogether. This is to ensure that steel production in 2021 does not exceed that of the previous year. According to the figures available, steel production in China appears to have been cut by at least 20%. In some cases entire blast furnaces are already being shut down.
The most important North American stainless steel producer North American Stainless (NAS) is falling victim to troubled supply chains. Due to a lack of industrial gases, the stainless steel producer, which belongs to the European Acerinox Group, has to stop production and has to declare force majeure. NAS accounts for 40% of the stainless steel produced in North America. How long this interruption in production will last is currently unclear.