China will push the country’s steel industry to cut output in an attempt to ease a massive glut and restore profitability at mills.
Authorities will promote industry restructuring to reduce production, the nation’s economic planning agency said at the National People’s Congress in Beijing on Wednesday. There were no specifics given on the volume of cuts in the sector, one of the worst affected by the property market downturn. The market had speculated that as much as 50 million tonnes of output a year could be chopped.
Annual production in the world’s biggest producer and consumer of the alloy has remained stubbornly above 1 billion tonnes despite Beijing’s efforts to guide output lower by linking it to carbon emissions. A collapse in earnings at steel mills and accusations that China is dumping its surplus overseas are now forcing the government to mandate cuts.
The pledges come nearly a decade after President Xi Jinping launched his first supply-side reforms of the steel industry, following an earlier crash in domestic demand and the subsequent flooding of overseas markets.
Countries are once again taking steps to block China’s exports, which topped 110 million tonnes in 2024, a nine-year high, while President Donald Trump is taking a tough line on tariffs that include Chinese steel.
One of the biggest state-owned steelmakers, Shougang Group Co, urged the government to help curb exports, according to an interview published in China Metallurgical News. Zhao Minge, the company’s chairman, said nationwide steel output should drop by 150 million tonnes by 2030.
Lower production should also help with Beijing’s carbon targets. A study at the end of last month called for swingeing cuts to capacity if the industry is to meet its climate goals and return mills to profitability.
Prices of the steelmaking staple iron ore fell following the announcement and the release of China’s wider annual economic targets, which were mostly in line with what the market had anticipated and focused more on non-industrial areas of the economy.
Zhuo Guiqiu, a Shenzhen-based analyst at Jinrui Futures Co, said that some elements of China’s spending plans, such as the amount of special sovereign debt to be issued, fell below expectations.
“The growth expectation for infrastructure demand is weaker, so steel and iron ore prices are under more downward pressure,” he said.
Iron ore futures dropped 1.1% to US$99.35 (RM441.87) a tonne in Singapore as of 12.23am local time (same time Malaysia), while yuan-priced futures in Dalian fell 1%. Steel contracts in Shanghai declined. Among base metals, copper rose 0.4% on the London Metal Exchange and aluminium added 0.2%.
Source:The Edge
