China's Hebei aims to cut iron, steel making capacity by 20 million T in 2018

8 March 2018

China’s top steelmaking province of Hebei will aim to slash iron and steel making production capacity by more than 10 million tonnes each and shut down all “zombie” mills this year, the province’s vice governor said on Thursday.

Yuan Tongli, speaking on the sidelines of China’s parliament, said the region has launched a new three-year plan to cut capacity and will ban any future increase in the region’s steel capacity.

Hebei this year will phase out its remaining three “zombie” mills, plants that have stopped production but have not closed down, after closing eight similar operations over the past five years, and gradually move steel mills to coastal regions, Yuan added.

The heavily polluted province, which surrounds the capital Beijing, is on the frontline of the country’s war on industrial overcapacity and pollution, as China desperately tries to improve its air quality.

Crude steel production in Hebei fell 0.7 percent last year to 191.2 million tonnes, 23 percent of the nation’s total output, data from the National Bureau of Statistics showed.

Yuan said Hebei has cut 69.93 million tonnes of steelmaking capacity and 64.42 million tonnes of ironmaking capacity respectively between 2013-2017.

In 2017, it shut 27.54 million tonnes of steelmaking capacity and 21.32 million tonnes of ironmaking capacity in 2017.

Tangshan, the province’s biggest steelmaking city, said the steel sector’s contribution to economic growth fell to 37 percent last year from 49 percent in 2013, said its mayor Ding Xiufeng on Thursday.

The city has proposed new restrictions on production once current curbs expire in March. China last year ordered 28 northern cities to cut steel output by up to half during the winter heating season from Nov. 15 to March 15.

Sudden output cuts in China’s steel sector are likely to become the “new normal” as the country continues to tackle pollution, Zhang Wuzong, chairman of privately owned Shandong Shiheng Special Steel said on the sidelines of the parliament on Tuesday.