Thirty steel mills in Tangshan, the capital of Hebei province in northern China, have been ordered to slash steel output by up to 70 percent from September, officials from several of those mills told Reuters.
Those steel mills, which have been included in the government list to cut production, include the state-owned Tangshan Steel, the major constituent of the country's top steelmaker Hebei Steel Group.
Tangshan Steel, the city's biggest mill, has been told to curb its crude steel output to 1 million tons per month from September to December, according to the government notice seen by Reuters, which cited a target for saving energy.
The city authorities have released a list of 30 steel mills in the region that will be directed to cut steel production over the rest of this year.
They include larger mills that remain after a mass shutdown of smaller mills.
The notice did not say what the company's previous monthly output was, but one steel official in the city said it was 1.7 million tons per month. Other mills have been told to make even deeper cuts.
The notice said the city's target for the whole of 2010 was now 67.5 million tons.
Earlier, about 18 steel mills in Wuan, also in Hebei province, were told to close their facilities.
South Korea's steelmakers rallied on that news.
"The thinking among investors here is that with those Chinese steel mills closed, product prices could go up," said Lee Won-jae, an analyst at SK Securities.
POSCO, the world's No.4 steelmaker, jumped 4.9 percent and Hyundai Steel advanced 4.2 percent.
Smaller producers also gained. Dongkuk Steel Mill climbed 2.7 percent and Dongbu Steel rose 1.1 percent.