China's private-sector Hebei Jinxi Steel has bought 600,000 t/yr of steel capacity from the Tangshan city government for around $132mn to expand its presence in the city.

The company currently operates the 8.5mn t/yr Jinxi and 2.5mn t/yr Jinxi Special Steel plants in Tangshan's Qianxi county. The company shut its Zhengda Iron & Steel facility in June 2017 under orders from the city government. It has purchased the new capacity on behalf of Zhengda Steel but will use it to expand its production capacity.

Tangshan, China's largest steelmaking city, has built a steel capacity reserve that it sells to mills. Steelmakers are also allowed to expand capacity through the blast furnace route as long as a larger volume of capacity has been eliminated elsewhere.

Jinxi said its capacity acquisition has been driven by Tangshan's stated policy of removing all blast furnaces with capacity below 1,000m³ and converters below 100t by 2020. The additional capacity will allow Jinxi to upgrade its existing equipment.

Hebei province plans to shut small mills and promote larger steel producers this year.

Hebei Jinxi has also acquired the 29pc equity stake in Zhengda Steel that was held by other shareholders. This gives it full control of the company, which has been dormant since the June 2017 shutdown.