China reduced steel production by 2.2% y/y in January-July

In January-July 2024, China reduced steel production by 2.2% y/y – to 613.72 million tons. This was reported by Reuters with reference to data from the National Bureau of Statistics.

In July, steel production in the country fell by 9.5% compared to June – to 82.94 million tons, which was caused by a decrease in demand and a reduction in the margins of steelmakers. At the same time, compared to the same period last year, this indicator decreased by 9%.

The average daily production of steel by Chinese steelmakers for July amounted to 2.68 million tons, which is 12.4% less than in June, and is the lowest since the beginning of the year. This is due to the fact that a number of local steel mills are currently undergoing capacity maintenance or have reduced production amid lower demand and prices for steel, particularly rebar.

Negative results in the steel industry have already caused iron ore prices to fall by about 3% – to $93/t. This is the minimum price for raw materials since the beginning of the year.

In 2023, China produced 1.019 billion tons of steel, which is 0.6% more compared to 2022. Thus, the downward trend in the country’s steel industry has stopped after two consecutive years of production decline.

Last year, the Chinese authorities did not introduce restrictions on steel production in line with ambitions to reduce CO2 emissions, which helped to increase the volume of production and the revenue of local steelmakers. The Chinese government plans to continue the practice of regulating steelmaking this year, but the scope and timing are not yet known.

Steel exports from China for 2023 increased by 36.2% y/y – up to 90.3 million tons. Steel imports amounted to 7.64 million tons, which is 27.6% less y/y. Iron ore imports for the year increased by 6.6% y/y – up to 1.179 billion tons.