Hebei April steel output drops as China's smog war intensifies

Mon May 19, 2014 1:09am EDT

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BEIJING, May 19 (Reuters) - Steel production in the northern
Chinese province of Hebei dipped 7.1 percent in April from a
year ago despite increasing output levels nationwide, a sign
that Beijing's war on smog is already eating into industrial
output in the region.
    Hebei, home to seven of China's 10 smoggiest cities in 2013,
according to official air quality data, has been under heavy
pressure to "restructure and upgrade" its economy and ease its
dependence on polluting industries like steel and cement.    
    According to data from the National Bureau of Statistics,
Hebei province produced 16.18 million tonnes of steel in April,
accounting for 23.5 percent of the national total. The province
produced 17.43 million tonnes in March.   
    Over the first four months of the year, Hebei produced 66.59
million tonnes, 24.5 percent of the total and 4 percent lower
than the same period of 2013.
    Hebei, which surrounds the capital Beijing, has been the
major front in a "war on pollution" that has targeted
small-scale industrial plants, including hundreds of
privately-owned steel mills. 
    The campaign has already had an impact on economic growth,
with provincial GDP up just 4.2 percent in the first quarter of
2014, down from a 9.1 percent expansion in the same period a
year ago and one of 8.2 percent in the fourth quarter of 2013.
 
    Hebei aims to cut crude steel capacity by 60 million tonnes
over the 2014-2017 period, with 15 million tonnes to be closed
this year. 
    Officials expect actual closures could be higher, with
dozens of mills struggling to survive a financial crisis brought
about by plunging prices and a government-driven credit crunch
targeting oversupplied heavy industries.
    The clampdown on credit has made it harder for smaller mills
to upgrade their equipment and meet exacting new industrial
standards. Industry officials have said in some regions as many
as 70 percent of the mills face closure. 
    Zhao Xizi, chairman of the All-China Chamber of Commerce for
Small and Medium-Sized Metallurgical Enterprises, told a
conference last week that more than 80 million tonnes of
capacity could end up closing in the next two years, leading to
the loss of as many as 200,000 jobs.
    Following is a table showing China's biggest steel producing
provinces in April and the first four months of the year,
according to the National Bureau of Statistics.
    
 Province    April     pct chg    share of   Jan-Apr    pct chg 
           output*       (yoy)   total (%)   output*  
    Hebei    16.18        -7.1        23.5     66.59          -4
  Jiangsu     7.95         6.1        11.5     31.43         8.7
 Liaoning     5.41        11.6         7.9     21.30         9.7
 Shandong     5.40           0         7.8     21.05         0.8
   Shanxi     3.67         0.7         5.3     14.55        -0.6
    China    68.84         2.1         100    271.86         2.7
    total                                             
 * Figures in million tonnes 

 (Reporting by David Stanway; Editing by Tom Hogue)
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