China urges steelmakers to cut production in northern part of country

This move is likely to slow down the seasonal accumulation of steel product stocks

Some Chinese steel producers in the north of the country will have to cut production from March 4 to ensure air quality during the annual parliamentary session (National People’s Congress), which is a customary step. This was reported by Reuters with reference to analysts and consulting companies.

According to Mysteel, several steel mills in northern China have been notified of a voluntary start to controls that will reduce blast furnace production by at least 30% between March 4 and 11.

Xin Ge, deputy director of consulting firm Lange Steel, noted that this move is likely to help slow the seasonal accumulation of steel inventories, supporting steel prices. He said higher steel prices, combined with expectations of stimulus measures after the meeting, would encourage mills to replenish raw material stocks for the next production ramp-up.

Demand for steel in China usually increases in March, as warm weather contributes to the resumption of construction activity.

It should be noted that steel production in China fell below 1 billion tons last year, reaching its lowest level since 2018. According to the National Bureau of Statistics of China, the country produced 960.81 million tons of steel last year, down 4.4% year-on-year. The decline was the result of a protracted crisis in the real estate market, which significantly limited domestic demand for steel products.