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On 19 April 2022, the National Development and Reform Commission said it will continue to reduce crude steel production across the country to ensure that crude steel production does not increase year on year.
According to statistics from the National Bureau of Statistics, Anhui and Hubei provinces recorded the highest annual growth in crude steel production from January to March, up 469,000 tonnes and 451,500 tonnes respectively, while Hebei province recorded an annual decline of 15.37 million tonnes.
Due to Hebei’s tight production restrictions from January to March, the province will not face pressure from overproduction of crude steel in the future, and there may be more room for increased production. Other provinces are under pressure to control steel production.
In March, China’s crude steel production stood at 88.3 million tonnes, down 6.1% from a year earlier. Given that total crude steel production was 1.03 billion tonnes in 2021 and 243 million tonnes in the first quarter of 2022, the production ceiling is to be capped at 789 million tonnes in the remainder of this year to ensure that this year’s output does not exceed last year’s.
As such, the average monthly and average daily production must not exceed 87.71 million tonnes and 2.87 million tonnes respectively.
There will not be much room for steel mills to increase production in the future compared to March, otherwise they will face more pressure from the government to reduce production in the second half of the year.
Since the introduction of the policy to reduce crude steel production in 2021, the output of domestic steel companies and the price of raw materials have been significantly affected.
Since the crude steel production reduction target is an annual plan, the production plans of domestic steel enterprises are not expected to change too much in the short term. In general, domestic steel companies will be relatively less affected by the production reduction policy in the first half of the year, and domestic crude steel production will continue to increase from March onwards, as many steel companies plan to resume blast furnace operations.
