Posted on 28 Dec 2021
China’s daily crude steel output is expected to rise heading into the new year after retreating over Dec. 11-20, from Dec. 1-10, due to the country’s easing steel output cut requirements in its 2022 decarbonization policy, market participants told S&P Global Platts.
An increase in production during the January-February off-season would lead to an oversupply in China’s steel market, but further monetary and fiscal easing might lend some support to steel prices, according to market participants.
Some sources said, although China’s steel output might inevitably increase in early 2022, sluggish steel demand, caused by a slowdown in property investment and new home starts, could keep steel output lower than 2021 levels.
China’s crude steel output dropped 1.9% over Dec. 11-20 to 2.40 million mt/day, from Dec. 1-10, according to China Iron & Steel Association, as output cuts intensified in North China amid calls for tackling air quality and pollution.
The output was still up 4.9% in the first 20 days of December at 2.42 million mt/day, from November’s average. China’s crude steel output fell 17.7% year on year between Dec. 1-20.
Finished steel inventories at steel mills and spot markets monitored by CISA were 5.3% higher on the year at 21.41 million mt as of Dec. 20, indicating that steel demand was weaker than the output decline.
China’s Ministry of Industry and Information Technology, or MIIT, has said industrial growth is its top priority in 2022 without specifying steel output cut requirements for the year.
“It’s almost certain that there will be much less government interventions in the steel production than in 2021,” a market participant said.
China in 2021 ordered steelmakers to keep their crude steel output within 2020 levels, in a bid to curb carbon emissions and cap iron ore prices, causing the country’s annual crude steel output to decline for the first time since 2016.
The commissioning of new iron and steel making capacity in China would accelerate in 2022 after being postponed in 2021, with steelmakers ramping up production without any output cut requirements, industry sources said.
A total of 86 million mt/year of pig iron making facilities were planned to be commissioned through capacity swaps in 2021, but as of December only 34 million mt/year were commissioned, according to Platts Analytics.
Source:Platts
