China's largest steelmaker Hebei predicts a 10% decline in production in 2021

China's largest steelmaker, Hebei Province, cut crude steel production by 10% in 2021 due to stringent environmental controls aimed at limiting pollution and reducing carbon emissions.

The northern province of Hebei, which produces more than twice as much as India's second-largest steel producer, produced 225 million tons of the metal last year, down 9.9% from a year earlier, data from the National Bureau of Statistics showed ( NBS) on Thursday.

However, it accounted for more than one-fifth of China's total steel production, which stood at 1.03 billion tonnes last year, 3% below the 2020 record.

The drop in output comes amid Beijing's demand for annual production cuts as authorities try to contain energy consumption in the iron and steel industry, which accounts for about 15% of China's total carbon emissions.

Along with Hebei, other large steel-producing provinces also saw their output drop from last year. The second and third manufacturers, Jiangsu and Shandong, saw output drop by 1.5% and 4.3% respectively last year, according to NBS.

With China hosting the Winter Olympics in February, the government ordered steel mills around Beijing to cut production until mid-March 2022.

The steel center of Tangshan city in Hebei province has issued several pollution warnings in recent months, with the industrial sector urged to cut production accordingly.

However, for plants outside the smog zone, such as the central province of Hubei and some southern regions, which have welcomed the relocation of steel capacity in recent years, production increased in 2021.

Steel production in Guangxi Autonomous Region jumped 6% to 36.6 million tons last year, raising its national ranking from tenth to seventh, according to the statistical bureau.

"Steel production (restrictions) this year may be reduced depending on market conditions," analysts at CITIC Securities wrote in a note. “But overall production is expected to fall due to government controls.”