China's Hebei Jinxi Expands Steel Capacity in Tangshan

The steel manufacturer in Tangshan city, Hebei Jinxi has bought 60,000 tonnes of steel capacity from the Tangshan government in an attempt to expand its presence in the city. The total amount paid by the company for the same is USD 132 million.

The company has a current production capacity of 8.5 MnT per year and 2.5 MnT special steel plant in Tangshan. The two companies Hebei Jinxi Iron & Steel and Zhengda Iron & Steel are the affiliated companies of China Oriental Group.

In June 2017, the group had shut down Zhengda Iron & Steel Facility with the capacity of 60,000 tonnes amid orders by the Tangshan government. However, Hebei Jinxi has acquired the 29% equity stake in Zhengda Steel that was held by other shareholders which has given Hebei Jinxi full control of the company.

Hebei Jinxi Iron and Steel mentioned that its capacity acquisition is driven by Tangshan's stated policy of removing all blast furnaces with a capacity below 1,000m3 and converters below 100 tonnes by 2020. The additional capacity acquisition will allow the company to upgrade its existing equipment.

Tangshan, China's largest steelmaking city, has built a steel capacity reserve that it sells to mills. Steelmakers are also allowed to expand capacity through the blast furnace route as long as a larger volume of capacity has been eliminated elsewhere. Hebei province plans to shut small mills and promote larger steel producers this year.

In 2018, Hebei has cut 12.3 MnT of steel capacity, 14.01 MnT of coal capacity and eliminated all loss-making steel enterprises (zombie mills). In 2019, the province will continue its efforts in reducing overcapacity and has planned to cut 14 MnT of steel capacity and 10 MnT of coal capacity.