* Net steel capacity seen up 35 mln T in 2016
* Operating capacity likely to have risen above 1 bln T
* New projects online, idled capacity returns after price
(Adds background, quotes)
SHANGHAI, Feb 13 Chinese steel capacity in
operation actually rose in 2016 after a high-profile closure
programme concentrated on shutting idled plants, environment
group Greenpeace said on Monday.
China - the world's top producer and consumer of steel -
said early last year it would shut as much as 150 million tonnes
of annual crude steel capacity over the next five years to
tackle a supply glut that had encouraged a surge in cheap
exports, exposing the nation to anti-dumping complaints.
The campaign to curtail steel capacity overlapped with the
country's war on pollution, with hundreds of poorly regulated
mills blamed for much of the hazardous smog drifting across
"We believe that it's above all in China's self-interest to
tackle the overcapacity problem, because of the tremendous
health and environmental costs as well as associated financial
risks," said Greenpeace campaigner Lauri Myllyvirta.
In research conducted with Custeel, a consultancy affiliated
with the China Iron and Steel Association (CISA), Greenpeace
estimated that China's operating capacity saw a net increase of
36.5 million tonnes in 2016, more than the entire annual
production of Brazil.
While a total of 85 million tonnes of annual capacity was
shut in 2016, exceeding a national target, the majority had
already been idled. Only 23 million tonnes of the yearly
capacity that was cut had been in operation.
Also, even though last year's plan banned all new projects,
Greenpeace said 12 million tonnes of new capacity went into
operation during 2016.
Greenpeace estimated another 49 million tonnes of steel
production was restarted over 2016 in response to a recovery in
China's industry ministry did not immediately respond to a
request for comment. The National Development and Reform
Commission (NDRC), which has driven the country's overcapacity
policies, also did not respond.
CISA had warned last year that capacity could increase
further in 2016 as previously approved projects continued to
come on stream.
Greenpeace said 80 percent of the net increase in capacity
took place in the heavily-polluted regions surrounding Beijing,
including Hebei province.
Hebei, China's biggest steel producing region, aims to cut
total capacity to less than 200 million tonnes by the end of the
decade, down from 286 million tonnes in 2013. The province has
promised to close 60 million tonnes of capacity from 2014 to the
end of this year to improve air quality.
China's total steel capacity stood at 1.1 billion tonnes at
the end of 2015, according to official figures, a surplus of
around 300 million tonnes.
Greenpeace's Myllyvirta said that while gross capacity was
likely to have fallen last year, operating capacity was
estimated to have risen to 1 billion tonnes, from about 965
"We hope that the worsening air pollution in north China ...
and the government's recent toughened stance on asset bubbles in
heavy industry and construction will help align policies and
bring local governments in line," he said.
Xu Shaoshi, the head of the National Development and Reform
Commission, China's economic planner, told reporters last month
that China would aim to shut another 45 million tonnes of annual
steel capacity in 2017.
(Reporting by David Stanway; Editing by Christian Schmollinger
and Tom Hogue)