Posted on 13 May 2022
China's National Development and Reform Commission (NDRC) has followed up its mid-April call to the nation's steelmakers for a further cut in crude steel output this year by asking local authorities to verify the assessment base for the reduction, market insiders say.
Xu Xiangchun, Mysteel's senior analyst also confirmed the information on Thursday. "Local authorities may send a notice to the relevant steel mills later, based on their actual situations after receiving the request from the central government," Xu said. The process will take some time, but not that long, he told Mysteel Global.
On April 19, NDRC declared that China will continue to cut crude steel output this year from 2021 to encourage the steel industry to pursue "high-quality" development rather than focusing on the old "quantity" mode, as reported.
The output cut will be concentrated in key regions that are susceptible to air pollution, and on key enterprises with poor environmental protection performance, high-energy consumption and outdated equipment and technologies, NDRC said.
As of now, however, many domestic steel mills have not received the notice. "We have read about such news on social media but have not received any message from the government side so far," an official from a steel mill in North China's Hebei explained Thursday.
Other steel producers in East China's Shandong and Southeast China's Jiangxi also confirmed that no definite request has so far been communicated to them, Mysteel Global learned.
Although Beijing has made no announcement regarding the specific tonnage it wants to see crude steel production pared by to December, market participants believe that the target of cutting steel output is likely be easier to achieve this year compared with that for last year given the substantial decrease in the first several months of this year.
Over January-March, China's total crude steel output had already declined by 28.55 million tonnes on year to 243.38 million tonnes, as reported. "The decrease (in domestic crude steel output) for the first half of 2022 is likely to exceed 30 million tonnes from the same period last year," Xu said.
Many Chinese steel producers have not been operating at their full capacity so far this year because of the impact that the COVID-19 resurgence is having on deliveries of steelmaking raw materials to the makers and on steel demand from end-users, Mysteel Global noted.
The central government's call for lower steel output in 2021 saw the country's total crude steel output fall by nearly 30 million tonnes on year to 1.035 billion tonnes last year, as reported.
Source:Mysteel Global
