China’s crude steel production is expected to reach 1.03 billion mt in 2021, down 35 million mt, or 3.3%, from 2020, Gao Xiangming, vice chairman of the China Iron & Steel Association said Jan. 10.
China’s crude steel output has declined on an annual basis for the first time since 2016.
Gao said he expected China’s steel demand in 2022 to remain at the level of 2021. Property construction will face downward pressure, but construction of infrastructure projects will accelerate, and the manufacturing sector will remain strong in 2022, he said.
However, some market sources said they believed steel demand growth in infrastructure and manufacturing would not be enough to fully offset the slowdown in the property sector in 2022, while China’s crude steel output might have to drop further in 2022 in order to strike a balance between supply and demand.
Due to constraints from high local government debts and a lack of new and steel-intensive infrastructure projects, some market sources said they expected infrastructure investment to see only low-single-digit growth in 2022.
China’s manufacturing sector is likely to face downward pressure in late 2022, with overseas demand likely to shrink fast as operations at overseas factories will be gradually back to normal, and the US may tighten monetary policy.
One mill source said China’s steel margins was likely to decline notably in 2022 from 2021 due to sluggish demand, but added that loss-making is unlikely to be seen in the steel industry as China is also planning to cap crude steel production in 2022 at 2021 levels, which would provide support to steel margins.
Crude steel output seen rising
According to CISA, China’s daily crude steel output over Dec. 21-31 rebounded 9.7% from mid-December to 2.634 million mt/day. As a result, daily crude steel output in December averaged 2.604 million mt/day, up 12.7% from November but still down 11.6% year on year. The rebound was largely because most Chinese steelmakers had ramped up production after they had met 2021 steel output cut requirements by November or mid-December.
Some mill sources said China’s crude steel output was likely to continue to climb in January but remain lower than a year ago, as steel output cuts in northern China had remained stringent to guarantee clear air ahead of and during the Winter Olympics in Beijing over Feb. 4-20.
They said they expected China’s crude steel production to rise along with demand for most of the first half of 2022, before falling in the second half in tandem with slower steel demand of both home and abroad.