China’s Tangshan City Sets a Higher Steel Capacity Cut Target for 2019 after Inspections

According to the document released by the city government it has set a target to achieve reduction of steelmaking capacity of 10.06 MnT, ironmaking capacity of 8.04 MnT, coal production capacity of 500,000 tonnes. The document pointed out that there are 40 steel enterprises in Tangshan, and the production capacity of pig iron and crude steel is 128 MnT and 134 MnT respectively, accounting for 53% and 56% of the Hebei province’s total capacity.

Subsequently, it is imperative for Tangshan City to further compress its capacity and optimize the industry structure. It is confirmed that in order to improve the air quality, Tangshan city, by 2020 will reduce the steel production capacity down to about 100 MnT and steel enterprises will be reduced to less than 30, completing the relocation of steel mils situated in urban areas and those environment vulnerable areas.

Tangshan city’s detailed plan to improve the air quality includes the following points:

Integrating and relocating of mills:

According to an official document, efforts will be made to promote the integration and relocation of steel enterprises in environmentally sensitive areas such as urban areas (county towns) and surrounding areas.

At present, eight steel companies in the city have started the work of integration, reorganization, and relocation. After the relocation, the steel smelting location will be integrated into 4 in the coastal area from 8 located in the surrounding area of the city. At present, the eight steel companies have formulated a plan to retreat from the city and their relocation work will be completed by 2020. Apart from this three steel companies have decided to move out of Tangshan City and transfer their steel production capacity to other cities.

Shut down of mills:

Encourage steel companies to withdraw from the steel industry and look for new pasture. For steel enterprises that are small in scale and do not have the conditions to meet the requirement on the new facility after the replacement, the capacity can be shut down by selling off and the funds can be used for resettlement of employees and transformational development.

Upgrading mills:

To fully promote the upgradation and swapping-for-less capacity of mills with BOF below 100 tonnes and BF below 1,000 m3, and ensure that by 2020, all the steel enterprises of Tangshan city will all complete the upgradation work. In case of failure these mills will be immediately shutdown. When small-capacity facility will be dismantled simultaneously, Tangshan City will increase the proportion of equipment upgrade projects for steel capacity replacement so as to complete the capacity reduction task.

Promotion of railway route for transportation

The document also pointed out that Tangshan City will promote a layout of steel enterprises along the railway line, realize the transport of raw material, fuel and finished steel products from road to railway-port. In 2019, specialized rail lines will be completed for 16 key steel enterprises. In addition, Tangshan also issued a document stating that before the end of 2020, the iron ore transportation in the city will achieve “road to rail” route and gradually discard the transportation of bulk cargo such as finished steel products by road.

Hebei province’s overall capacity cuts

In 2018, Hebei province's total capacity reduction in steelmaking was 12.3 MnT, ironmaking was 10.9 MnT, and all the “zombie steel enterprises” were all cleared out. The 28 heavily polluting enterprises included in the annual plan all completed the relocation and transformation.

The work report of the Hebei provincial government proposed that in 2019, Hebei will unswervingly resolve excess capacity, strictly implement standards such as quality, environmental protection, energy consumption, and safety, and promote upscale, excellent enterprise with shutdown of small, inferior ones.

In 2019, Hebei province will further cut steel capacity by 14 MnT, coal by 10 MnT pushing steel capacity of Zhangjiakou and Langfang totally out of the industry.