China May Resort to Semis Import to Cut Crude Steel Output in 2021

China's Ministry of Industry and Information Technology, committed to reducing China’s crude steel output in 2021 from record 1.05 billion tonnes in
China May Resort to Semis Import to Cut Crude Steel Output in 2021
China Crude SteelSCMP

China's Ministry of Industry and Information Technology, committed to reducing China’s crude steel output in 2021 from record 1.05 billion tonnes in 202 to achieve carbon emission targets, has recently released a series of measures to accelerate the reduction of steel output which includes a ban on illegal additions of new capacity, bolstering its guidance on capacity swaps & push for mergers & restructuring the steel industry to solve long term issues around competition, unreasonable resource allocation and weak synergies. Similarly, China Iron and Steel Association is advancing a series of carbon emission reduction programs to help fulfil China's commitment to green development and has set up a new committee to lead efforts aimed at carbon emission reduction planning, research and development of carbon emission reduction techniques and setting carbon emission reduction regulation policies. However, according to the CISA steel demand in China in 2021 will likely rise slightly amid the steady development of the economy and steel exports are unlikely to improve much, while imports will increase. CISA’s vice chairman Mr Luo Tiejun told a briefing that higher demand this year could be met by other means. He said “We can strengthen imports of primary steel products, especially billets, so that rising demand can be met without increasing output. The government is planning to roll out favourable policies to encourage such imports.”

CISA has also suggested improving steel scrap related policies to take advantage of resources at home after China allowed imports of high grade scrap in 2021.

China, the country with the largest level of carbon emissions in the world, promised to become carbon neutral before 2060. Its steel industry is responsible for about 15% of the total emissions, but China continued to ramp up steel production last year to meet the surging demand amid the post-pandemic economic recovery. China produced 1.053 billion tonnes of crude steel and 1.325 billion tonnes of steel products in 2020, recording a YoY increase of 5.2%and 7.7% respectively, as aside from the decreased steel production in March due to the impact of COVID-19 pandemic, the steady steel output rise was realized in other 11 months. In addition, strong steel demand in China lifted its 2020 steel imports to the highest level since 2005, even as the country maintained its status as the world's biggest steel exporter. China's finished steel imports rose by 64.4% YoY to 20.23 million tonnes in 2020, with exports falling by 16.5% YoY to 53.68 million tonnes. China also imported 18.3 million tonnes of semi finished steel items in 2020, five times higher than in 2019

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