China announces plans to cut steel production

China plans to restructure its steel industry by cutting production in the sector. This was announced by the National Development and Reform Commission (NDRC) at the National People’s Congress in Beijing, Bloomberg reports.

At the same time, the authorities did not give specifics on the possible scope of cuts in this sector. The market assumed that steel production could be reduced by 50 million tons per year.

Citigroup analysts noted that this is the first time that the National Commission has proposed to reduce steel production in its draft plans. Experts and traders believe this is a clear signal from the government that it will regulate steel production this year.

Katai’s annual steel production has recently remained at more than 1 billion tons, despite Beijing’s efforts to reduce it by linking it to carbon emissions. Falling profits of steel mills and strong steel exports, which partially offset the decline in domestic demand, are causing complaints from an increasing number of countries. So China is forced to pay attention to the problem.

Reducing production should also help meet Beijing’s carbon targets. A recent analysis by the Center for Energy and Clean Air Research says that a radical capacity reduction (15% in 2025) is needed if the steel industry is to reduce carbon emissions and return to profitability.

As GMK Center reported earlier, in 2024, China’s steel companies reduced steel production by 1.7% year-on-year, producing 1.005 billion tons. This is the lowest figure in five years. Experts noted that last year is likely to be the last year when steel production in the country exceeded 1 billion tons.

In 2023, China produced 1.019 billion tons of steel, up 0.6% from 2022. Thus, the downward trend in the country’s steel industry has stopped after two consecutive years of declining production.