Steel plants are cutting production in response to electricity shortages plaguing the country.

Power and transport outages have reduced stocks for coal and coke at some steel mills to critical levels, with some having less than three days' supplies, Reuters quoted Luo Bingsheng, vice chairman of China Iron and Steel Association, as saying.

Luo said that Angang Steel Co's stocks are down sharply in northeastern Liaoning Province and shipments to Ma'anshan Iron & Steel in Anhui Province had been disrupted by rail problems caused by the snow.

The freezing weather conditions have led to higher demand for coal and the government is slowing manufacturing activity to ensure sufficient power is available for heating and other essential services.

As a result, according to Steel Business Briefing, several mills have been asked to cut power use.

An electricity pylon collapsed at Ningbo Steel in eastern Zhejiang Province on Monday, leaving the mill with no power. And in Jiangsu Province, leading private mill Shagang Group has also closed some capacities and will perform maintenance until after the Spring Festival, SBB said.

Weather has not been so harsh in the south, but Kunming Steel in Yunnan Province says it is running seriously low of raw materials.

China's steel markets are quiet in line with low construction activities before the Lunar New Year holiday. Volumes should pick up by mid-February if the freeze melts, but rebuilding the market and mill inventories may take time, SBB notes.

(Shanghai Daily January 31, 2008)