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China's Hebei to shut down 60% of steel factories by 2020

China's Hebei to shut down 60% of steel factories by 2020
China's Hebei province may see the shut down of 240 out of 400, or 60%, steel factories by 2020, as part of efforts to reduce excessive industrial capacity, local media reported.

The nationwide supply-side reform, not just in Hebei province, is also expected to boost the country's imports, offering greater activities to dry bulk seaborne trade, DNB Markets said in a recent research note.

The northern Hebei province, which churns out nearly a quarter of China's steel output, has banned new projects until it reaches a target of producing 200 million tonnes per year, it was reported.

The province also has plans to cut cement production capacity by two-thirds or some 60 million tonnes.

However the flip side of such drastic measures to cut industrial capacity would lead to the province losing some RMB180bn ($27.7bn) in revenue and laying off more than one million workers in the next two years, reports said.

Global dry bulk shipping trade is currently suffering from oversupply of vessel tonnage suppressing freight rates. The level of imports to China, one of the largest growing economies in the world, is seen as a major contributing factor to the health of dry bulk shipping.