BEIJING (Reuters) – China’s crude steel output in 2023 was flat from a year earlier, official data showed on Wednesday, steadying after two years of decline, as resilient demand and the lack of a government cap on output allowed mills to boost operating rates.
The world’s largest steel manufacturer produced about 1.02 billion metric tons of the ferrous metal last year, data from the National Bureau of Statistics showed.
Beijing’s imposition of caps on crude steel output to reduce carbon emissions had caused output to drop 3% in 2021 and 1.7% in 2022.
The absence of such caps in 2023, when priority was placed on supporting the economy and reviving the ailing property sector, contributed to a stabilising of steel output, analysts said.
The 2023 total was in line with a forecast from the state-backed China Iron and Steel Association (CISA), although it was not as strong as some analysts had anticipated.
Robust demand from the shipbuilding, solar photovoltaic and automotive sectors partially offset a shortfall in demand from the property sector, Citi analysts said in a note.
Higher-than-expected steel exports also helped domestic mills to maintain a relatively high operating rate last year, said Chu Xinli, a Shanghai-based analyst at China Futures.
Month-to-month comparisons, however, showed that crude steel production in December declined for a fifth consecutive month, falling by 11.4% from November to 67.44 million tons, the lowest monthly output since December 2017, according to the statistics bureau.
Several Chinese steelmakers conducted maintenance on blast furnaces last month, reflecting some environment-related restrictions late in the year and margin losses at a number of producers, analysts said.
The December total equated to about 2.18 million tons of average daily output, according to a Reuters calculation based on the data.
China will continue to promote supply-side structural reform in the steel industry this year with a focus on high-end operations, an official from the National Development and Reform Commission, China’s state planner, said last week.
“China will strictly control the increase in new steel capacity … (and) speed up a green transition,” Lu Weisheng, director of the state planner’s industry department was quoted as saying during a meeting of CISA members.
Steel demand in China is expected to decline by 1.7% in 2024, following a drop of 3.3% in 2023, the state-backed China Metallurgical Industry Planning and Research Institute forecast in late December.
(Reporting by Amy Lv and Andrew Hayley; Editing by Edmund Klamann and Christopher Cushing)
