North China steelmakers told to close for a month

Eighteen steel mills in Wuan district of Hebei province in north China have been ordered to shut down operations for up to one month, the China Securities Journal reported on Monday.

Steel mills which do not meet state requirements for environmental protection and energy savings have been forced to close since Sunday, the newspaper said.

Hebei province is the biggest steel production region in China and the world's largest steel producer. It is expected to produce up to 620 million tonnes of crude steel this year.

Wuan district had a total crude steel capacity of around 20 million tonnes per year by end 2009, the newspaper added.

Hebei Steel Group, the country's top steel mill has not been affected, the paper added.

Earlier last week, around 20 percent of electricity supply had been cut at all steel mills in Wuan after local authorities were urged to meet the year-end energy savings target.

Elsewhere, several steel mills in Shanxi province and several eastern Chinese provinces including Jiangsu and Zhejiang have also been affected by cuts in electricity supply, while some have been entirely shut down, industry consultancy Mysteel said.

News of the production shutdown has firmed market sentiment and driven up rebar futures prices in the morning session.

The most active January rebar contract at the Shanghai Futures Exchange rose 3.9 percent to 4,534 yuan a tonne at 0242 GMT. The contract touched a high of 4,592 yuan a tonne, its loftiest since April 27.