Chinese steelmakers urge authorities to limit steel production

15 major producers of long products in China are calling on the authorities to take measures to limit the output of relevant products amid falling steel prices. Reuters reports with reference to the China Iron and Steel Association (CISA).

Prices for long products have fallen sharply amid continued weakness in China’s real estate and infrastructure sectors, which has led to losses and reduced margins for local producers of the relevant products.

Demand for steel bars from infrastructure construction fell as local budgets reduced funding. 12 cities and provinces with high debt burdens have postponed or completely suspended infrastructure projects. As a result, rebar prices on the Shanghai Futures Exchange have fallen by 14.2% since the beginning of the year.

Faced with declining demand, some steel producers have already taken steps to support prices. According to CISA, 38.4% of capacity has been shut down for maintenance in Shanxi province.

Rebar production in China in January-February 2024 fell by 0.3% y/y – to 32.1 million tons.

Earlier, CISA called on steel mills to reduce production intensity in order to meet the needs of users and the principle of supply and demand balance.

As GMK Center reported earlier, Chinese steel companies increased steel production by 1.6% y/y – to 167.96 million tons in January-February 2024. Average daily steel production for the period amounted to 2.8 million tons, up from 2.18 million tons in December and 2.86 million tons in January-February 2023.