China’s central government is to continue its
environmental efforts during the 2019-20 autumn-winter season
to support the results achieved in the past two years. The
regulations involved are likely to curtail industrial
operations and to reduce production, as they have done
Recently, the country’s Ministry of
Environmental Protection issued a draft document for comments
on air pollution controls during the autumn and winter months
of 2019 and 2020 in Beijing, Tianjin, Hebei and nearby
provinces. The controls will be imposed to deal with the heavy
air pollution that is typical while coal-powered heating
systems are in use.
Among the plans, China seeks further adjustments
in industries that create the worst pollution, including
steelmaking, construction materials, coking and chemicals.
Steel production curtailment, refractories
According to the draft document, steel production
in provinces such as Hebei and Shanxi should be cut by 15.75
million tonnes before December 31 this year. Other measures
such as shutting down and removing unqualified kilns in Henan,
Hebei, Shandong and Shanxi provinces have been suggested.
In the construction materials industry, upgrades
to equipment in refractory units are required to reduce the
emission of polluted air and to enhance monitoring.
Coal-gas ovens should be replaced with units that
burn natural gas to reduce the emission of carbon dioxide from
Some refractory producers moved to natural gas
power around five years ago, and said that this regulation
would probably be targeted on smaller factories.
Systems should be installed in calcining kilns
used in refractory production to monitor their output of
volatile organic chemicals (Vocs) and to control gas pollution.
And these should be joined to a network monitored by the
country’s Ministry of Ecology &
Refractory producers should ensure the correct
running of automatic monitoring facilities and data
transmission to the network, whether their units are working at
normal production rates, or if production is cut or suspended,
or in any other abnormal conditions.
A market source in China told Fastmarkets that any
factories which adopt natural gas ovens and Vocs monitoring
facilities will not be affected by the environmental
regulations in the coming winter season.
The regulations imposed this year on provinces and
cities in most of the northern part of China will be even
stricter than before, considering that 2019-20 is a key stage
for China’s "Blue Sky Protection Campaign" begun
in July 2018. This is a three-year plan intended to curb
environmental pollution and to improve the air quality in
Slow demand for refractory raw
As with the previous orders, the propositions for
this year, although not imposing a blanket shutdown of all
factories in the provinces and cities mentioned, will still
have a significant effect on the output of the industries
Given that steel accounts for 60% of refractories
applications, any curtailment of production in the steel
industry will probably result in less demand for refractories.
This in turn will generate changes in the supply and demand of
refractory raw materials such as graphite, magnesia and
refractory-grade bauxite and fused alumina.
Graphite, an upstream material of the refractory
sector, has shown a downward price trend amid muted demand from
the sector and a surge in imports of graphite materials.
Some graphite producers believe that the
environmental inspections during autumn-winter will put
pressure on downstream refractory production until the end of
the China National Day holidays, which will run October 1-7,
due to the Vocs controls, but the influence on production is
unlikely to be any greater than was seen in the corresponding
period last year.
Moreover, most bigger refractory producers made
the move to natural gas power a few years ago, so the removal
of coal-gas ovens should have little effect on overall
The price of graphite flake, 94% C, -100 mesh
(-194), fob China, was assessed by Fastmarkets at $540 per
tonne on Thursday September 19, unchanged since August 22.
The price of magnesia, one of the key refractory
raw materials, remained soft, falling in response to high
stocks and recent sluggish demand from the downstream
refractory sector. The restrictions in autumn-winter might
continue to depress demand from refractory makers and put more
pressure on magnesia prices.
Fastmarkets’ latest assessment of the
spot price for magnesia, dead burned, 97.5% MgO, lump, fob
China, was $550-650 per tonne on September 17, down from
$600-700 per tonne one week earlier.
Elsewhere, in terms of refractory-grade bauxite
and fused alumina, the picture was complicated. Given that
Henan, Shandong and Shanxi provinces – which are the
production hubs for refractory-grade bauxite and fused alumina
- are also the major areas for the environmental restrictions,
the production of refractory-grade bauxite and fused alumina
will be influenced by the environmental rules.
Nevertheless, according to market participants,
the risks to supply will have less effect on the price of the
refractory-grade bauxite and fused alumina than in previous
years, when demand was higher.
"In the winter season, the price might go up on
the supply shortage. But weakening demand is another factor to
consider in pricing. Clients’ acceptance of higher
prices has yet to be seen," one fused alumina producer in Henan
Fastmarkets’ fortnightly assessment
of the price of bauxite, refractory-grade, 85%/2.0/3.15-3.2
(0-6mm), fob Xingang, was $380-390 per tonne on September 19,
unchanged since late July.
And the fortnightly assessment of the price of
alumina, fused brown, min 95% Al2O3, refractory sized (0-6mm),
fob China, was $750-760 per tonne on September 19, unchanged
from the previous assessment.