Companies in the steelmaking county shift focus to high value-added products

Qianxi county, in Hebei province's largely industrial city of Tangshan, is firmly on the road to recovery, after seeing many of its pillar iron and steel mills hit hard by the decline in demand and prices since 2008.

Up until then, Qianxi's iron and steel production accounted for 90 percent of local economic growth, making it one of the northern province's top 10 counties, according to Bai Chunming, Qianxi's Party chief.

The mountainous county spans 1,439 square kilometers and first started iron ore exploitation in the 1980s.

It was an industry which in its heyday enriched thousands of local residents, who were proud of the area's industrial prowess.

"But the county's mining and steelmaking businesses first started showing signs of weakness, when the iron and steel industry felt the full impact of the 2008 global financial crisis," Bai said.

Orders dried up, as did Qianxi's fiscal revenues.

"We felt the crisis so strongly because the county's only strong industry was iron and steel," he said.

"The prices of both products continued dropping, and it became harder and harder to see any way out of the spiral," Bai said.

Between 2006 and today, the price of billet steel in China－a freshly made product in the form of metal bars or rectangles－has slipped 64 percent, from 5,600 yuan ($860) per metric ton to 2,000 yuan, while powdered iron has dropped to around 700 yuan, less than half of the price back in 2011, according to local government figures.

The State Council announced in February that over the next five years, annual domestic crude steel production capacity would be cut by 100 million tons to 150 million tons.

From 2013 to 2017, Hebei expected to cut its iron and steel capacity by 60 million tons, according to the province's State-owned assets supervision and administration commission.

Fourteen of Tangshan's 32 local steelmakers reported a debt-to-asset ratio of at least 70 percent last year, higher than the national average of 69.32 percent, according to Xinhua News Agency, which quoted a survey by the Tangshan Steel Association.

But Bai said the city's steel companies have been fighting hard to survive.