BLOG: Chinese steel = Hebei, but for how much longer?
This is hardly surprising, though, because after nearly two decades, China’s steel landscape has not changed much at all – with Hebei still being the country’s No.1 steelmaking province and its steel output still contributing on average to about one-quarter or one-fifth of the country’s annual total in different years.
The established positions of Hebei and Tangshan in the Chinese steel industry also remain despite the fact that since 2016, the country’s central government has launched a series of optimization initiatives for the steel sector that include eliminating excess capacity, enhancing pollution control, and promoting mergers and acquisitions among Chinese steel mills. Inevitably, their dominance of the industry has made Hebei and Tangshan the primary targets of Beijing’s campaigns.
For the first half of 2020, China produced 499 million tonnes of crude steel, among which Hebei contributed 122.5 million tonnes or 24.6% of the total. To put this in the context, over this year’s first six months alone, Hebei produced over 10 million tonnes more than that India – the world’s second largest steelmaking country – produced for the whole 2019, World Steel data shows.
Hebei’s share of China’s output during January-June was just about the same as the province’s 25% contribution for the whole year of 2012 – when the Chinese steel industry began to taste the bitterness of the long, cold winter of slumps in steel prices and demand that lasted until the end of 2015.
The contribution made by Hebei during H1 this year was also much larger than the 18.3% share it commanded back in 2003 at the start of China’s steel industry boom, and even greater than its 23% share of production in 2008, the last year of comparative normality before the world was blindsided by the global financial crisis where China tried very hard to evade with a Yuan 4 trillion stimulus package. As these numbers show, Hebei has evidently been benefiting greatly from years of capacity expansion in China’s upstream steelmaking.
When Hebei has safeguarded its top position over the past nearly 20 years, two provinces in East China - Jiangsu and Shandong - have managed to secure their positions as the second- and third-largest steelmaking provinces in China as well.
China’s steel output for H1 2020 (million tonnes)
Hebei |
122.5 |
Jiangsu |
56.3 |
Shandong |
38.8 |
Total |
499 |
source: China's National Bureau of Statistics
Will the glorious days last?
This trinity of these Chinese steel giants, however, may not remain the same in the next 20 years, especially when Beijing is keen to relocate more steel capacities to the country’s coastal areas, and while the central government remains eager to increase the industry’s concentration with the nation’s top 10 steel producers to supply 60% of China’s annual steel output from the present contribution of less than 40%.
Some changes are already quietly in train, and in 2019 for example, steel output in Shandong declined by a sizeable 11.4% from 2018 to 63.6 million tonnes – as against the 8.3% on-year growth in the country’s overall steel production last year. And the days when the names “Hebei” and “Tangshan” are synonymous with “steelmaking powerhouses” might well be numbered.
Written by Hongmei Li, li.hongmei@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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