China steps up curbs on steel output

In the first half of 2021, Chinese steel mills have churned out nearly 12% more crude steel compared to the same period in 2020.

However, Mu Guoqiang of Chinese steelmaker Hesteel, said steel mills have no choicebut to pay more attention to decreasing production in line with government policy, especially for state-owned firms.

The steel sector is one of the biggest polluters in China, producing around 10% to 20% of carbon emissions in the country. Beijing has targeted the industry as part of its bid to reduce carbon emissions and reach net-zero by 2060.

However, due to environmental and other policy goals, China has moved swiftly to curb steel production. In the latest move, the State Council, Chinas cabinet, has announced tariff hikes on certain steel products to cut exports.

Industry insiders also said that other measures have also been taken to curb steel production. “Cutting production is the main theme for the entire steel industry for the rest of the year not only because of environmental goals but also the unsustainability for firms to produce so much steel when the cost is so high,” a steel industry insider told the Global Times , adding that firms have been asked to “strictly follow government coordination.”

Given the rapid growth in steel output in the first half of the year, the task to cut steel production to ensure full-year output is largely in line with the level in 2020 could be very challenging but serious reduction is widely expected, analysts said. That could be mean steel production could drop as much as 12 percent year-on-year in the second half of the year, according to some analysis.

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