Chinese government’s policy to cap 2021 steel production below 2020’s level should keep a lid on supply which bodes well for Indian steel producers, believes domestic steelmaker JSPL.
“It is expected that the restrictions will not be relaxed until the end of Q1 of 2022 and may become the norm in the future,” Chinese steelmaker Baoshan Iron and Steel Co Ltd said while announcing its financial report.
With export rebate being eliminated, mills are now moving away from exports, JSPL said in a presentation.
“The Chinese policies which are wheeling around two themes of widespread or common prosperity and also the decarbonization, those policies which have been finalized by China, have led to a visible slowdown in the overall economy. That also led to lower investments in the residential property sector. We have seen a contracting steel demand in China month after month,” Seshagiri Rao, Joint Managing Director and Group CFO, JSW Steel Ltd told analysts.
“Both the crude steel capacity and production restriction will continue in China in future, and the iron ore market will return to oversupply, so the iron ore prices will also run weak with less fluctuations in 2022,” Baoshan said.
China’s steel capacity expansion has ended, said the Chinese steelmaker. It will not only ensure ‘carbon peak’ in 2030, but also limit the height of peak. “As a high carbon emissions industry, China steel industry must be arranged as early as possible, and both the capacity and output limitation will be the norm in future,” Baoshan said.
Steel demand is falling in China at a progressive rate, from 13 percent in July to 18 percent in August to 24 percent in September.
“So, the steel demand in China in the first 9 months of the calendar year has fallen to 731 million tons (mt) as against 736 mt in the previous 9 months,” Rao said.
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