Decline in Activity at Liuzhou Steel Plant Signals Potential Supply Risks Ahead

Introduction

Liuzhou Iron & Steel Co., Ltd. operates in Guangxi, China, under the ownership of Liuzhou Iron & Steel Group Co., Ltd. With an annual production capacity of 12,500 tons of crude steel, the plant primarily produces finished rolled products, including plates and profiles, serving key sectors such as automotive, infrastructure, energy, and machinery.

Activity Change Overview

Recent satellite observations reveal a significant decrease in thermal activity at the Liuzhou plant, marked by a -9.74% shift over 90 days. This drop aligns with broader trends in China’s steel industry, where emissions have also risen by 9.7% year-over-year, as reported in “Emissions in China’s steel industry increased by 9.7% y/y in March“. The observed decrease in activity may further impact supply chains, particularly as steel billets have seen price declines amid increasing iron ore prices.

Thermal Activity Data

Implications for Buyers and Analysts

The observed decline in activity at Liuzhou may suggest potential supply constraints, particularly as overall emissions in China’s steel industry are on the rise. Steel buyers and market analysts should remain vigilant, as the decrease in operational output coupled with fluctuating iron ore prices, which are nearing psychological thresholds, could lead to increased market volatility. Stakeholders are advised to consider these trends in their supply chain strategies as the industry adapts to changing operational efficiencies and regulatory landscapes, especially in light of the environmental performance improvements noted in “Chinese metallurgy increases emissions, but improves environmental performance.”