China Hebei steel production drops 2.4 pct y/y in May

29 June 2015

Northern China's Hebei, the country's biggest steelmaking province, produced 16.11 million tonnes of the material in May, down 2.4 percent on the year, hit by weak underlying demand and a seasonal construction downturn.

Crude steel output from Hebei in the first four months of the year reached 83.28 million tonnes, 0.3-percent lower than the same period last year, according to figures from the National Bureau of Statistics.

Hebei's total output amounted to 23 percent of the national total in May and 24.5 percent in the first five months.

Hebei's steel sector is one of the principle targets of China's "war on pollution", with the province under pressure to slash annual steel capacity by 60 million tonnes over the 2014-2017 period.

China's Ministry of Industry and Information Technology is about to release details of a plan to curb nationwide capacity by 80 million tonnes over the 2015-2017 period, with small and private mills in Hebei likely to bear the brunt of the cuts.   

An official with the ministry told a forum on Saturday that environmental rules for the steel sector were also likely to be tightened over the 2016-20 period and firms that fail to comply will be forced to close, state news agency Xinhua reported.

Hebei's production decline has been offset by increases in Jiangsu on the eastern coast, which has seen output rise 12.5 percent to 44.93 million tonnes over the January-May period of 2015.

Following is a table showing output from China's top steelmaking regions in May and the first five months of 2015, and their share of the total.

Province      May     pct chg     Jan-May   pct chg         May
           output*       (yoy)     output*     (yoy)  % of total
    Hebei    16.11        -2.4       83.28      -0.6        23.0
  Jiangsu     9.09        13.1       44.93      12.5        13.0
 Shandong     5.84         0.9       27.68       0.0         8.3
 Liaoning     5.64         2.7       26.98       0.6         8.1
   Shanxi     3.38       -14.8       16.27     -12.4         4.8
    China    69.95        -1.7      345.63      -1.6         100