Steel production

The indicator slightly increased compared to 2022 – by 0.6%, ending a two-year downward trend

China’s steelmaking companies produced 1.019 billion tons of steel in 2023, up 0.6% from 2022. Thus, the downward trend in the country’s steel industry has stopped after two consecutive years of declining production. This is evidenced by data from the China Iron and Steel Association (CISA).

Last year, the Chinese government did not impose restrictions on steel production in line with its ambitions to reduce CO2 emissions, which contributed to an increase in production and revenue of local steelmakers. At the same time, in 2021-2022, the downward trend in the industry was supported by the relevant restrictions.

No restrictions were imposed in 2023, as the Chinese authorities prioritized supporting the economy and recovering the troubled real estate sector. Although demand for steel from the construction industry was still insufficient, this was partially offset by high consumption of steel products by the shipbuilding, energy and automotive sectors, which supported steel companies.

At the same time, the period that contributed to the increase in steel production in 2023 was January-July, as the last 5 months of 2023 saw a month-on-month decline. In particular, in December, production fell by 11.4% compared to November and by 14.9% y/y – to 67.44 million tons, the lowest level since December 2017.

«Last month, more and more Chinese steelmakers carried out maintenance of blast furnaces amid growing pressure due to expectations of the introduction of steel production restrictions or a decrease in profits,» analysts said, according to Nasdaq.

China’s pig iron production in 2023 amounted to 871 million tons, up 0.7% compared to 2022. Rolled steel output increased by 5.2% y/y – to 1.36 billion tons during the year. In December, pig iron production fell by 11.8% y/y – to 60.87 million tons, while rolled steel output increased by 1.5% y/y – to 108.5 million tons.

As GMK Center reported earlier, in 2022, China reduced steel production by 2.2% compared to 2021, to about 1.01 billion tons. The country’s steel production fell due to a slowdown in the economy, a downturn in the real estate market, and government restrictions to improve the country’s environmental situation.

In 2021, due to similar factors, Chinese steelmakers reduced steel production by 3% y/y – to 1.03 billion tons. Annual production fell for the first time in 6 years.