China's Hebei meets 2018 steel capacity cut target

North China's Hebei province reduced its crude steel capacity by 12.29mn t/yr in 2018, exceeding its target of 12mn t/yr set earlier in the year.

The province, China's largest steel-producing region, also eliminated 10.87mn t/yr of pig iron capacity. The Hebei government claimed to have eliminated all chronic, loss-making enterprises, called zombie mills, in the province this year.

Hebei had eliminated 69.93mn t/yr crude steel capacity and 64.42mn t/yr pig iron capacity during 2013-17.

China had set a target of reducing 30mn t/yr crude steel capacity in 2018 which would see it achieve the 2016-20 five-year economic plan target of reducing 150mn t/yr of capacity in the same year. China's President Xi Jinping has said reducing excess industrial capacity will remain a major focus of the country's economic policy, so there is a possibility Beijing may set a steel capacity cut target for 2019 or it could issue general guidelines on shutting zombie mills, replace urban capacity with coastal mills and pledge a stricter enforcement of emissions regulations.

Hebei has set a target of reducing 40mn t/yr of steel capacity in 2018-20 so it is likely to announce a 2019 target.

"Our province strictly enforces environmental protection, energy consumption, technology and other standards," said the provincial government. "By adopting measures such as restricting production, suspending production and shutting down facilities according to law, we will force non-standard production capacity to withdraw from the market."

The province will encourage steel companies to transfer capacity abroad by setting up new plants overseas and acquire foreign companies.

source: Argus Media