China: Hebei cuts 47.6 mn t/year steel capacity over 2018-20

Over the period spanning January 2018 through to last July, North China's Hebei province, the country's top steel producing province, had removed a total of 47.6 million tonnes/year of iron and steel capacity, according to a post from the Ministry of Ecology and Environment (MEE) on August 19. This means the provincial government achieved its goal of cutting 40 million t/y by 2020 some five months in advance, Mysteel Global notes.

MEE's Wednesday post was the transcript of a press conference held by provincial government officials reporting Hebei's work on air pollution control. The reduction in steel capacity contributed to the 13% decrease in PM2.5 concentration to an average of 47ug/cu m throughout the province over January-July, according to the post. The atmospheric particulate matter concentration PM2.5 is a key indicator China's central government uses to measure air pollution.

In its three-year work plan to combat air pollution over 2018-2020, Hebei had set the goal to cut 40 million t/y of iron and steel capacity and control the province's total steel capacity to below 200 million t/y.

In 2018, the province permanently removed 12.3 million t/y of iron and steel capacity and in the following year, it eliminated another 14 million t/y, as Mysteel Global reported. Based on the latest announcement from the conference, some 21.3 million t/y of capacity was removed over January-July, Mysteel Global calculated.

A Beijing-based steel analyst expressed amazement at the speed of capacity reduction this year, reckoning that most of the tonnage may have been removed via old-for-new capacity swap programmes. "There are some steel works (in Hebei) moving from downtown areas to suburban industrial parks and other kinds of capacity swap projects in the second half of this year," he observed.

In China, for the installation of new steel projects to gain government approval, a mill must scrap an equivalent or larger volume of existing steel facilities, with the old-for-new capacity swap ratio in Hebei being 1.25:1, Mysteel Global notes.

Tangshan Iron & Steel Group (Tanggang), a subsidiary of China's second largest steelmaker Hebei Iron & Steel Group (HBIS) and located in the downtown area of Tangshan, Hebei, had shut down all its blast furnaces as of August 16, in preparation for moving to Laoting, a coastal county also under the jurisdiction of Tangshan.

For the Laoting project, HBIS needs to eliminate 9.34 million t/y of old steelmaking capacity at its various subsidiaries including Tanggang, in order to add 7.47 million t/y of new steelmaking capacity, Mysteel Global learnt from the Laoting project's capacity swap programme announcement.

Besides, those steelmakers which have relocated out of Hebei to other regions might be counted as capacity that Hebei has cut as well, according to the analyst.

For example, Hebei Jinxi Iron & Steel Group (Jinxi), China's leading section steel producer, said it will permanently shut a total of 3-4 million t/y of steel capacity in Tangshan including 2 million t/y for special steel, as part of the capacity quotas to fulfill its relocation plan to build a 10 million t/y steelworks in Fangchenggang, Southwest China's Guangxi, as Mysteel Global reported.

Since 2016, Hebei has approved 35 steel capacity swap projects, according to the press conference.

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.

Photo: World Steel