Posted on 16 Aug 2022
Shandong province in East China, the nation's third largest steel-producing hub on last year's result, aims to cap its crude steel output in 2022 at around 76 million tonnes, slightly lower than last year's 76.49 million tonnes, Wang Xiao, deputy director of Shandong's Development of Industry and Information Technology, told local media on August 12. The target is in line with its previous commitment to upgrade the local steel industry.
This target is also in keeping with the nation's general pledge of last year to continue reducing annual crude steel output. In fact, in the first half year of 2022, Shandong's crude steel output reached 36.5 million tonnes, lower by a substantial 8.75 million tonnes or 19.3% on year, according to National Bureau of Statistics data.
Consequently, to comply with the provincial government's latest target, the most that Shandong's steelmakers will be able to produce this half will be around 39.5 million tonnes of crude steel, Mysteel Global understands.
Besides limiting crude steel, Shandong will also control its coke output this year to within 32 million tonnes, largely flat from last year's 31.87 million tonnes, according to Wang.
Other provincial governments are yet to unveil any concrete numbers on their annual crude steel output targets, Mysteel Global noted.
"It is still hard to predict whether other provinces will just ensure that crude steel output remains largely level with last year, like Shandong, or whether their output will be reduced," a Beijing-based analyst commented.
"Nevertheless, if local governments do not insist that steelmakers cut their production this year – just keep output at or just below last year's levels – then it will be steel demand that generally decides the steelmakers' production, because any oversupply will just lower their steel margins," he commented.
The analyst also noted that China's central government has softened its tone on meeting its 2022 economic growth target, and now is only asking that those local governments and industries 'strive for the best possible outcome'.
"This indicates that the goal of maintaining economic growth still exists, but the pressure has been eased slightly in response to actual circumstances. For example, the real estate issue is still rather serious, and as solving that problem might need more time, it will continue to weigh on steel demand in the near future," he said.
Source:Mysteel Global
