Hebei Province found fudging steel capacity cuts as new probe ordered by Beijing
Last January, the hub of China's steel production, the northern province of Hebei, had announced that it would cut output to ease pollution and help curb oversupply. Hebei Governor Zhang had told local lawmakers that it planned to reduce steel output by 8 million tonnes in 2016. More than one year later, it appears that Governor Zhang lied about Hebei's intentions, and according to a provincial notice by the Chinese province, it has emerged that China's compliance with its own mandatory production cuts has been problematic.
According to Reuters, the same Hebei province has launched a probe into steel overproduction in the city of Tangshan amid concerns that firms have continued to raise output despite mandatory capacity cuts. Hebei province government has been ordered by China's central government on March 25 to investigate firms in Tangshan that have restricted but not cut production, restricted production but not actually cut emissions and cut capacity but actually increased output
The document was issued by a special provincial policy team responsible for restructuring the steel industry. It said Hebei has already established an inspection team and Tangshan must begin its own investigations immediately.
Cited by Reuters, an industry source based in Tangshan confirmed the veracity of the document, but said it was unclear whether the new round of inspections would have any immediate impact on production or prices.
Tangshan produces around 90 million tonnes of steel a year, more than the whole of the United States.
Environmental group Greenpeace said in February that China's active steel capacity actually rose by 35 million tonnes in 2016 after the high-profile closure program focused mainly on shutting plants that had already been idled. Lauri Myllyvirta, senior global campaigner at Greenpeace East Asia said that "The steel industry's capacity reduction targets need to be upgraded to reductions in actual production - only then will we see real improvements in air quality.”
Source : Zero Hedge