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China’s Hesteel targets higher output in 2018

04 May 2018 07:32 (+01:00 GMT)
China's Hesteel targets higher output in 2018

Singapore, 4 May (Argus) — China's second-largest steel producer Hesteel aims to raise crude steel output by 1.4pc this year, reversing a decline in 2017.

Hesteel's crude steel output fell by 7pc to 26.92mn t last year because of a reduction in its production capacity. The company aims to produce 27.3mn t of crude steel this year.

Around 72pc of the company's steel sales last year were specialised products sold to large industrial companies such as carmakers BMW, Mercedes-Benz, Volkswagen and Toyota, as well as producers of appliances and construction machinery.

Hesteel, which is based in northern China's Hebei province, expects stronger demand from construction of the new city of Xiongan near Beijing, infrastructure projects in the Beijing-Tianjin-Hebei region and continuing One Belt, One Road projects.

Hesteel reduced its pig iron production capacity by 1mn t/yr and crude steel capacity by 1.2mn t/yr in 2017.

Continued steel capacity cuts in China and strict controls on new capacity will "further improve the supply and demand relationship and bring new opportunities for steel companies" in 2018, said Hesteel.

But output restrictions in cities such as Tangshan, where Hesteel's flagship plant is based, and stricter environmental standards could lower production efficiency and "substantially" raise production costs. Hesteel also expects to pay more for logistics and raw materials this year.