Hebei's July steel output drops 6pc

Hebei, the top steel province on the mainland, saw output fall 6 per cent on the year to reach its lowest rate in eight months, hit by weaker demand as well as a state campaign to shut polluting plants and reduce a profit-sapping capacity glut.

Production of crude steel touched 15.16 million tonnes last month, down 2 per cent from June, figures from the National Bureau of Statistics showed.

Hebei is on the frontline of a "war on pollution" declared by Premier Li Keqiang in March, and is under pressure to shut at least 60 million tonnes of steel capacity by 2017. It also has to cut coal use by 40 million tonnes over the same period.

A crackdown on credit and a collapse in steel prices have also put many of the province's steel enterprises at risk of bankruptcy, and at least 16 mills have suspended production.

A local government survey showed the province had 286 million tonnes of annual crude steel capacity last year. Production was 188.5 million tonnes, 24.2 per cent of the national total.

Output over the first seven months of the year hit 113.6 million tonnes, down 3.5 per cent from the same period last year. Nationwide production rose 2.7 per cent to 480.76 million tonnes.