(Adds quote from Hebei official, details, background)
BEIJING, March 7 China's top steel producing
province Hebei will shut more outdated steel capacity this year
if market conditions allow, the governor said on Friday, adding
that more than 10 percent of the province's steel companies were
in dire straits.
Hebei, with 148 steel companies, accounts for about a
quarter of China's total national steel output. Answering
Beijing's call to tackle overcapacity, it aims to cut its annual
capacity by 15 million tonnes this year, and by 60 million
tonnes by the end of 2017.
Provincial governor Zhang Qingwei has warned that any
official responsible for another tonne of additional steel or
cement capacity will be fired.
Near record low steel prices have put significant stress on
Chinese steel firms, while greater determination to enforce
environmental regulations has imposed additional costs on the
enterprises. Beijing's orders for banks to halt fresh loans have
also fuelled fears there could be a wave of bankruptcies.
"Outdated capacity will be closed in accordance with
national standards. There are also a number of steel firms that
are facing operating problems and 16 have stopped producing," he
said in a press conference on the sidelines of China's annual
Beijing has traditionally struggled to impose its will on
Hebei, home to thousands of barely-regulated private industrial
enterprises that have provided considerable employment and tax
revenues for local authorities. Previous attempts to consolidate
the steel sector and curb overcapacity have not been successful.
The province's steel production capacity is around 286
million tonnes per year, according to the latest estimates, with
the national total well in excess of 1 billion tonnes.
China as a whole will close 27 million tonnes of crude steel
capacity this year, the government said this week.
Chinese steel output, which hit 779 million tonnes last
year, is now close to its peak, with the market weakening and
the government determined to tackle a capacity glut responsible
for mounting debts and heavy pollution, executives said.
(Reporting by David Stanway; Editing by Tom Hogue)