China’s steel production to sustain, exports will decline

China’s steel production could remain at around 1 billion tonnes/year for the next ten years, but large volumes of steel exports will no longer be allowed, according to China Iron & Steel Association chief economist Wang Yingsheng.

At a conference held earlier this week, Wang Yingsheng said he believed the industrial foundation of the domestic steel industry will remain basically unchanged in the next ten years. The dual limitation on Chinese output that comes from energy consumption and peaking carbon, as well as the move towards carbon neutrality mean China’s steel industry no longer attaches great importance to exports, he added.

Under the requirements of industrial upgrading, China hopes to end low-end steel exports, Kallanish notes. The export peak for China’s steel industry was in 2015, when steel export volumes exceeded 110 million tonnes for the year.

Meanwhile, the economist also said that crude steel production needs to be controlled within 2.5 million tonnes/day for the remainder of this year, in order to meet the target of stabilising steel output on-year. China’s National Statistics Bureau data show crude steel output increased by 2% year-on-year to 805.88 million tonnes by end-September.

In order to match the 1.065 billion tonnes of output seen in 2020, production in October-December needs to be limited to within 259mt, which means 86.3m t/month on average. Based on September output of 73.75mt, China should not only easily reach the goal of not increasing crude steel output, but may even see a decrease in output. Winter output restrictions and power shortages are expected to continue, but pressure to meet China’s annual target is easing.

By Kallanish Team