Posted on 01 Mar 2022
China's steel consumption is expected to be stable this year, supported by the central government's determination to maintain consistent economic growth and its attempts to promote manufacturing and transportation infrastructure construction, according to Qu Xiuli, vice chairwoman and secretary general of China Iron & Steel Association.
Addressing Mysteel's annual conference in Shanghai on February 26, Qu called on market players to make joint efforts to maintain steel supply and price stability this year, so as to better satisfy domestic demand and safeguard the industry's profitability.
As the world's largest steel producing and consuming country, China's apparent steel consumption last year totaled 993 million tonnes, down 5.3% on year, while crude steel output declined 3% on year to 1.033 billion tonnes, Qu said quoting CISA statistics.
The drop in crude steel output reflected the central government's clearly-stated order last year to keep the crude steel output lower than 2020, Qu explained, with the result that China's share of global crude steel production last year retreated slightly to 54% compared with 57% in 2020.
This year, Beijing's controls on domestic steel output and capacity will remain in place due to the government's strong resolve to reduce of carbon emissions, according to Qu. However, on the other hand, sufficient steel supply is needed to guarantee stable economic development this year, she observed.
Qu said that the ways of controlling steel output this year would be different to last year. She did not elaborate, however.
While the overall "policy environment will be comparatively more balanced (than last year)," Chinese steelmakers still need to be "self-disciplined" in terms of stablizing production. They should convey their ex-works pricing policies "scientifically", based on enhanced communication with end-users, Qu said. Industry players could utilize futures as hedging tools but should avoid speculation, she added.
For this year, efforts to promote low-carbon "green" steel production will build upon the progress made during 2021, she said. By the end of 2021, 23 steel companies with around 145 million tonnes/year steel capacity had already met all the criteria of the country's very tough "ultra-low" emission standards, presented to the steel industry in April 2019, Qu observed.
Moreover, around 225 companies with 536 million t/y capacity are proceeding with the green transformation in order to meet the standards, Qu shared. Contained in those standards is the goal that by 2025, 80% of China's steel capacity should meet the norms, Mysteel Global notes.
Other achievements of the steel industry last year mentioned by Qu included enhanced industrial concentration and record high profitability.
Last year, the contribution of the top ten Chinese steelmakers to the country's total steel production increased to 41.5%, up from 39.2% of 2020, Qu observed, noting the significant merger between leading steelmakers Ansteel Iron & Steel Group and Bengang Group.
In the meantime, the accumulated profits of CISA's member steel mills reached a record high of Yuan 352.4 billion ($56.8 billion) last year, up around 60% on year. But Qu stressed that the industry's profit margin (on a 100% profit/revenue basis) was only 5.1% last year, still lower than an average of 6.8% for the country's entire industrial sector. The low profit margin was largely due to high costs including those of raw materials, Qu mentioned.
This year, the profitability of the steel industry will continue to face challenges, she warned. On the one hand, it's difficult to envisage steel prices this year gaining significantly from current levels as Beijing will strictly control the rises in commodity prices. On the other hand, iron ore and coal prices remain persistently high and electricity charges and mills' investments in environmental protection are on the rise, according to her.
Source:Mysteel Global
