12.7.18

CHINA'S APPALACHIA?

Hebei province, north of Beijing, is going to clean up its heavy industry in advance of the Winter Olympics.
According to an article published by the Hebei provincial environmental bureau, the province will aim to cut a total of around 40 million tonnes of steel smelting capacity from 2018 to 2020.

It aims to have just 60 steel enterprises by the end of the decade, with 90 percent of capacity controlled by its top 15 firms, it said, citing senior government officials at a meeting on Wednesday.

The cities of Baoding, Langfang and Zhangjiakou - a host city for the 2022 Winter Olympics - will shut all their steel mills by 2020. Chengde and Qinhuangdao will close half. Chengde, Zhangjiakou and Baoding will also eliminate all their coal mines by the end of 2020.
To put that shakeout into perspective, that's the equivalent of five Gary Works or Sparrows Point fully-integrated steel mills, or more capacity than once operated in the Cleveland - Youngstown - Pittsburgh corridor.  It's true that there has been excess steelmaking capacity in China long before the latest iteration of import tariffs on steel with the purpose of stopping dumping or something took place, and we'll see whether China's gangster gramophones lay some of the blame for the closures on the tariffs, or spin the closures as making an effort to comply with the various new environmental accords.

But we're still looking for that Chinese Billy Joel, as what went down in Allentown going on forty years ago is about to go down in Hebei.
Hebei will also shut another 5 million tonnes of annual cement capacity, 10 million tonnes of coking capacity and 1.5 gigawatts of thermal power capacity by 2020, the provincial Communist Party secretary Wang Dongfeng was quoted as saying.

Hebei closed more than 60 million tonnes of steel capacity and slashed coal use by 40 million tonnes over the 2013-2017 period, though critics complained that some of the shuttered mills were already bankrupt “zombie” firms.

The province had 286 million tonnes of annual steel capacity in 2013, and it is aiming to bring that figure down to 200 million tonnes by the end of the decade.
That's still knocking off the equivalent of the United States's primary steel capacity, and retaining ... just in that one province ... close onto twice the United States's primary steel capacity.  With that kind of excess capacity, it might tempt a Chinese steelman to send ships full of steel to the U.S., declare a ridiculously low value for the steel, have Customs pay that low declared value to confiscate the steel, and then let Customs sell it.

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