Posted on 04 Apr 2016
China’s top steelmaking province of Hebei has ordered local governments to step up efforts to restructure the sector and cut overcapacity, and will also encourage mills to boost exports, it said in a document published this week.
Hebei told city-level authorities to set up special funds to help steel enterprises close capacity and restructure debt, according to the document, which was published by the province’s Industrial and Commercial Federation, a local business chamber.
But the province also called on banks to increase lending to competitive steel mills and support technical upgrades. Mills should also be encouraged to shift capacity abroad and boost exports to ease the domestic supply glut, the document said.
China exported a record 112 million tonnes of steel products last year, fuelling concerns from other steel-producing nations and more anti-dumping complaints. India’s Tata Steel put its British operations up for sale, blaming a glut in cheap Chinese steel for the move.
Exports from Hebei alone stood at 36.98 million tonnes in 2015, up 36.1 percent and amounting to a third of the national total, but steel export earnings fell 1.15 percent, the Hebei Metallurgical Industry Association said in data published in late February.
The metal association said 31 of the province’s 82 major steel firms made losses in 2015, and average profits stood at just 1.77 yuan ($0.27) per tonne of steel produced, down 96 percent on the year.
Chronic overcapacity and a slowing economy in the world’s top steel-producing country have dragged down steel prices to multi-decade lows, forcing “zombie” mills to miss debt repayments and suspend operations.
Hebei closed 6.3 million tonnes of steelmaking capacity last year, and has shut a total of 41.06 million tonnes since 2014, the industry association said. Hebei has pledged to shut a total of 60 million tonnes over the 2014-2017 period.
Hebei will aim to shut another 8 million tonnes of production this year and keep annual capacity within 200 million tonnes by the end of the decade.
China as a whole is planning to shed 100 million-150 million tonnes of capacity from a 1.2 billion-tonne total in the coming five years.
Hebei’s total crude steel capacity stood at 286 million tonnes in 2014. It produced 188.3 million tonnes last year, up 1.3 percent from 2014 and amounting to 23.4 percent of the national total.
