Chinas steelmaking hub of Hebei province must cut 60
million tonnes of steel capacity by the end of 2017 to help
control air pollution, the local government said Sept. 12.
The move follows plans
unveiled by Chinas State Council the same day to improve
air quality across the nation by slashing coal consumption,
promoting clean energy usage and accelerating the closure of
outdated capacity in selected industries.
The council aims to
reduce the level of airborne particulate matter in the
Beijing-Tianjin-Hebei region, Yangtze River Delta and Pearl
River Delta by 25 percent, 20 percent and 15 percent,
respectively, by 2017. New projects in these areas wont
be allowed to set up their own coal-fired power plants, and
unapproved projects from select oversubscribed industries will
In the first half of
this year, seven of the 10 most polluted cities were located in
Hebei, according to a Ministry of Environmental Protection
report issued in August.
"We have heard a lot
of talk about Hebei cutting steel capacity this year, but
things sound very certain this time round," a Hebei-based mill
source said. So far, however, there have been no further
updates issued, he added.
With no detailed plan
of action, players are unclear what effect the output cuts will
have on the steel industry.
"Its hard to say
whether prices will definitely go up as a result of the
capacity reduction, but there is likely to be some support from
both the higher environmental costs and tighter supply
concerns," an analyst in Shanghai said.
consolidation is also expected to occur in Hebei as a result of
the emissions control measures, market players said.
Air pollution has become a big concern in China. Earlier
this year, Beijing was shrouded in dense, debilitating smog for
three days. The central government will be watching Hebei
officials closely over the next few years to see how they
tackle the reduction of emissions in their area, a Beijing
A version of this
article was first published in AMM sister publication Steel