China’s steel industry should use capacity management – CISA

This can become the main means of balancing supply and demand

China’s steel industry should use capacity management as the main means of addressing the imbalance between supply and demand. He Wenbo, executive chairman of the China Iron and Steel Association (CISA), said this at a specialized event, Kallanish reports.

At the same time, he believes that steel mills should switch to low-carbon production to ensure their long-term viability.

He Wenbo explained that the current controversy in China’s steel industry is how to utilize sufficient production capacity to meet the limited demand for steel. This means that capacity should be reduced in the transition to meet climate goals, and steel mills can promote mergers and reorganization.

The CISA representative noted that the conditions for maintaining a high share of exports are currently not favorable, but the government will encourage the export of high value-added products. Intense competition in the international market and trade barriers impede foreign supplies of ordinary Chinese steel products.

In addition, according to him, the essence of the steel industry’s transformation will be a “green” transition. Challenges facing the industry include ultra-low emissions, improving energy efficiency, developing a carbon-neutral route, improving the steel industry’s EPDs, and accelerating research on low-carbon steel standards.

According to SteelMint, China’s steel demand has peaked twice in the last two decades – in 2008 and 2021. In particular, steel production in 2008 amounted to 500 million tons. The situation is different now. Domestic demand in the country is declining due to a slowdown in the real estate market and urbanization processes, changes in population structure, etc. The automotive sector is a major consumer of steel, but its share is much smaller than that of construction. The country’s steel demand, which is likely to have peaked in traditional industries, may be stimulated by the transition to green energy in the future.

As GMK Center reported earlier, Chinese steel companies in October 2023 reduced production of steel by 3.7% compared to the previous month – to 79.09 million tons. Compared to October 2022, this indicator decreased by 1.8% in October 2023. China’s steel production has fallen for the fourth month in a row.