In Tangshan, the former steel hub of China just a few hours drive outside the capital Beijing, the once busy streets have turned quiet and a sense of despair and desperation is evident.

Dozens of men, once employed in the city’s numerous mills that pumped out as much steel as possible to help feed China’s unprecedented economic boom and fuelled the nation’s residential and commercial property market development, are now aimless on the streets.

China’s government has declared steel and iron production across the country will be reduced by 80 million tonnes within the next two years, a direct consequence of the authorities’ aim to implement more sustainable economic growth and help fix the worsening pollution crisis. It is estimated that about 60 million tonnes of the reduction will come from Hebei, where Tangshan, a prefecture-level city, is located.

The province, the heartland of steel production, has seven of the top 10 most polluted cities in China and residents are demanding action.

An Air Quality Index (AQI) reading yesterday showed pollution in Beijing was 130, more than four times the level that the World Health Organisation considers unhealthy.

Beijing residents awoke to messages on their smartphones warning them of the poor air quality and advising them not to spend long periods of time outside.

In Hebei, steel production last year dropped by 0.6 per cent but significantly it was the first decline in 14 years. The region produced 185 million tonnes of the nation’s total 823 million tonnes of steel.

Steel giant Baosteel yesterday reported its 2014 net profit was down by 0.45 per cent, to 5.79 billion yuan ($1.2bn), and warned of tough conditions in the year ahead for the Chinese industry.

“The steel sector remains extremely competitive in 2015 and so, demand and supply will slow in tandem,” the company said in a statement.

“The steel sector will still suffer from oversupply and it will be a new normal for companies’ operations to just eke out small profits.”

Several unprofitable steel factories have been forced to close in Hebei in the past year, and production cutbacks have been ordered at the larger state-owned organisations that are still working.

                                                                                                                                XINSTEEL  NEWS