Steel firms in China’s dirty North get the hammer
January 19, 2014 Leave a comment
Steel firms in China’s dirty North get the hammer
Staff Reporter
2014-01-19
New Wuan Iron and Steel Group, the largest private steel firm in China’s largest steel-producing province, is slimming down its annual capacity to 8 million tons by 2017. The slash, more than 50% of its 2013 output, is indicative of major tremors in the nation’s steel industry, reports the Chinese-language Economic Observer.New Wuan, which came into being in early 2006 with the merger of 18 small steel factories in Hebei, is going under the knife. “We will close down some smaller factories and suspend some substandard facilities,” said Wan Xihe, company chairman.
Tangshan Steel, also in Hebei, targets a 2017 capacity shutdown of 40 million tons from its 2012 mark of 81 million tons.
Under the guidance of the Ministry of Industry and Information Technology, the Hebei provincial government has pledged to cut 60 million tons of steel capacity by 2017 and another 26 million tons by 2020. “Different from its tolerance in the past, the Department of Environmental Protection and the Hebei provincial government has put forth a set of environmental protection standards and is ready to remove steel firms incapable of meeting them,” said the manager of a steel firm in the province.
Zhou Guocheng, chief advisor to Custeel, an integrated metallurgy website set up by China Iron and Steel Association, said, “Due to the lax environmental regulations of some municipal governments, small steel firms with inadequate environmental facilities have thrived, capitalizing on their low-cost edge.”
To combat the serious smog problem, the Chinese central government instructed Hebei and neighboring municipalities to slash their steel capacities by the end of 2017. Hebei’s 60 million target is followed by 6.7 million tons for Shanxi province and 22.57 million tons for Shandong province. Tianjin must fall to less than 20 million tons.
Shandong province, also a major steel production center, has also required major steel makers in the province to reduce their capacities by specific amounts by 2015.
The required capacity reductions are pressing against an overwhelming force of expansion, noted industry insiders. Total capacity in 2013 was actually 50 million tons higher than 2012, and 90 million had been set aside for projected use or current construction as of Nov. 2013. This is despite the industry’s total capacity utilization rate sitting at less than 45%. For all the government’s suppression, China’s total steel capacity still rose to 950 million tons at the end of 2012, up from 470 million tons in 2005.
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