Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Hebei Iron and Steel (HBIS) or Hegang has signed a deal to shut and relocate its 7mn mt iron and 6.8mn mt steel making capacity in Tangshan to Laoting. HBIS Laoting will start production in September and reach an initial output of 1.5mn mt iron and 1.48mn mt steel by December.


Hegang’s Tangshan branch has a steel rolling capacity of 11mn mt and except for a cold rolling mill and a few other assets the relocation will be completed by September. The Tangshan branch had an asset value of CNY38.5bn as of March 31, 2020. The plant was one of HBIS’ core assets and its closure will impact its operating results. In 2020, Hegang pig iron output will be reduced by 1.82mn mt, and steel production will dip by 1.74mn mt.


The plant has shut a 2000m² blast furnace (BF), a 3200m² BF, a 150-ton LF, three sintering machine and other units including converters, RH furnace, slab casters, a 2.5mn mt 1700 hot-rolled sheet line, a 2.5mn mt 1810 hot-rolled sheet line, 2 sets of 500,000mt wire rod mills. The remaining assets including including a 3200m3 blast furnace, three billet CC, and a 500,000mt small and medium-sized steel rolling mill, and a 1mn mt bar rolling mill will be shut by September.


The capacity relocation is part of the 13th Five-Year Plan according to which the Hebei provincial government and Tangshan City planned to shift the plant outside the city to the coastal area of Laoting to reduce pollution. The Tangshan municipal government will support the company building a new industrial base in the Bohai Rim area. The new Hegang Laoting Steel project has logistics costs advantage, and will primarily help HBIS avoid pollution alert production outages that were frequent in Tangshan city. Beside the project will support the company adjust its product mix to high-end and profitability products in the construction sector.


In April 2020, HBIS acquired Hegang Laoting Iron and Steel to make it a wholly-owned subsidiary of the company. The acquisition increased HBIS pig iron production capacity by 7.32mn mt and steel capacity by 7.47mn mt. 

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