SteelOrbis Shanghai
In recent days,
China's National Development & Reform Committee (NDRC), Ministry of Land and Resources, State Environmental Protection Administration, and the
China Banking Regulatory Commission (CBRC) jointly issued an announcement stating that measures are to be taken to rectify problems in the steel industry in Hebei Province.
The announcement specified that there are three major existing problems in Hebei's steel industry:
The first is blind expansion of
production capacity with widespread and severe regulatory violations. During the period from 2003 to 2005, crude steel
production in Hebei Province increased 33.51 million mt with an annual growth of 35 percent - 10.6 percent higher than the national average. However, only Tangshan Steel, Handan Steel and Chengde Steel received approval from the NDRC for their new projects. Other projects, all in the category of illegal constructions, made a significant contribution to the excessive expansion of steel
production capacity. The steel
production output in Hebei Province totaled 40.35 million mt in 2003, jumping to 73.86 million mt in 2005. Industrial insiders estimate that the province's crude steel
production will reach 90 million mt in 2006, accounting for 21 percent of total national steel
production. Moreover, as Hebei province has a shortage of water resources, the sharp increase in steel
production also aggravates the water supply situation.
The second major problem is low industrial concentration. There are 202 steel mills in Hebei Province, of which 88 are involved in steel
production, 42 in iron
production, and 72 in steel rolling. In 2005, only three steel mills in Hebei reached a crude steel
production figure of 5 million mt. The output of these mills accounted for just 38.5 percent of total
production in Hebei. Meanwhile, the average
production of steelmakers in the province was lower than the national average, at just 839,000 mt.
The third major problem is needless proliferation of mill furnaces. By the end of 2004, Hebei Province's iron making capacity reached 77.03 million mt, of which 36.16 million mt of iron were produced by blast furnaces of less than 300 m3 - accounting for 47 percent of the total iron making capacity in the province.
In order to solve the above problems, the official announcement of the Chinese authorities urged a clean-out of newly-added steel
production. The detailed measures are as follows:
1. Cleaning up all steel-related construction projects of the past three years
Based on the 2003 steel
production figures, inspections should be carried out on projects that increased iron and steel
production or
production capacity over the last three years, and should be finished before November 30, 2006.
In accordance with the inspection results, the Chinese government will then determine the list of projects that are in accordance with requirements as well as the necessary rectification plan to be implemented.
2. Urging the Hebei Provincial Government to execute in comprehensive manner the structural adjustment plan
By the end of December 2006, Hebei Province will release the list of steel mills, the
production capacity and out-of-date equipment that is to be eliminated by the end of 2007. This information will also be handed to the National Development & Reform Committee (NDRC), Ministry of Land and Resources, State Environmental Protection Administration, and
China Banking Regulatory Commission (CBRC).
In addition, before November 30, the Hebei Province authorities are to hand up their progress report regarding the elimination of 7.3 million mt and 4.14 million mt of out-of-date
production capacity in the Tangshan and Handan regions respectively.