China's Hebei province to cut steel capacity in bid to boost air quality: party official

BEIJING (Reuters) - China’s top steelmaking region of Hebei will cut 14 million tonnes of annual steelmaking capacity both this year and next year as it strives to improve air quality, the province’s Communist Party head said on Thursday.

FILE PHOTO: A woman wearing a mask walks past buildings on a polluted day in Handan, Hebei province, China January 12, 2019. REUTERS/Stringer/File Photo

Speaking at a meeting of Hebei delegates at the National People’s Congress in Beijing, Wang Dongfeng also said the province would reduce its concentration of PM2.5 - lung-damaging particulate matter of less than 2.5 microns in diameter - by at least 5 percent this year from 2018 levels.

“We would rather sacrifice GDP in order to guard blue sky in Beijing. That’s a political task,” Wang said.

Hebei surrounds Beijing in northern China and has been blamed for much of the smog that drifts over the Chinese capital.

Despite the capacity closures, the province produced around 237 million tonnes of crude steel in 2018, according to the National Bureau of Statistics, up around 50 million tonnes since 2014 and accounting for more than a quarter of the national total in China, the world’s biggest steelmaker.

Home to major steel hubs such as Tangshan and Handan, Hebei’s average PM2.5 concentration in 2018 was 56 micrograms, according to government air quality data. The annual average was down 13 percent year-on-year but still well above a national reading of 39 micrograms.

The eight Hebei cities that are subject to special pollution controls have also seen smog rebound this winter, with average PM2.5 hitting 91 micrograms from October to February, up 11 percent from a year earlier, according to Reuters calculations.

Unlike last year, China did not set a national target for reduction in steel capacity in 2019. A goal to cut 150 million tonnes by 2020 was achieved by the end of 2018.

At the same meeting on Thursday, Hebei governor Xu Qin said the province had eliminated 82.23 million tonnes of annual steel capacity in 2013-18, while the number of steel companies operating in Hebei had halved over that period.

By the end of 2020, the total steel capacity cut by Hebei will be equivalent to that of the world’s second-biggest steel-producing country, Xu said.

India was the world’s second-biggest steel producer in 2018, lifting output by 5 percent to more than 106 million tonnes to leapfrog Japan, according to the World Steel Association.

Xu said the steel sector still needed to be restructured under the ownership of a smaller number of firms, and warned of mergers, plant relocations and the shifting of more capacity overseas, with expansion at home no longer permitted.

Local steelmakers also needed to focus more on high-end products, he said.

“We need to formulate and strictly enforce standards for environmental protection, quality, technology, energy consumption, water consumption and safety that are more stringent than national standards,” he said.

Reporting by Muyu Xu and Tom Daly; Additional reporting by David Stanway in SHANGHAI; Editing by Richard Pullin and Tom Hogue