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2021 in Review for China’s steel industry

2021 in Review for China’s steel industry

2021 was undoubtedly a year full of surprises, where China’s crude steel output declined on-year for the first time in five years and where Chinese steel prices hit historical highs under the twin thrusts of improved domestic and overseas market conditions.

In the past year, China’s central government acted more proactively to help maintain domestic commodity supply and price stability, and steel mills rolled out ambitious plans for carbon reduction amid the global drive towards peak carbon and carbon neutral. Below we summarize some the Chinese steel industry in 2021.

China issues 5-year plans for economic, industrial development

2021 was the first year of China’s 14th Five-Year Plan period (2021-2025) and during the year, the central government announced key economic and industrial development targets it aims to meet by 2025 and the major tasks it will undertake in order to meet these.

The officially titled 14th Five-Year Plan for National Economic and Social Development and the Long-Range Objectives Through the Year 2035 released on March 13 2021, is quite ambitious. In the plan, Beijing set the major economic targets covering GDP, energy consumption, carbon emission, unemployment rate, urbanization, and energy production.

Following the release of the general guideline, various sectors issued their respective five-year plans. Critical to the steel industry, last December 29 the country’s Ministry of Industry and Information Technology (MIIT), along with related ministries, released the five-year development plan for the country’s industrial commodities including oil and petrochemicals, steel, nonferrous metals and construction materials.

The development plan aimed to achieve optimized industrial structure, clean and ‘smart’ production/manufacturing and emphasized the supply chain security. Significantly, it stated that China’s crude steel capacity cannot increase over 2021-2025 but must be cut, and that capacity utilization should be maintained at a reasonable level given that the country’s steel demand has plateaued.

Over the five years, the country will still implement the “old-for-new” capacity swap policy regarding steel making facilities – new capacity being installed should be equal or lower than the old capacity being removed – to make sure there is no increase in steel capacity.

The country will continue to promote M&As to enhance industrial concentration and will nurture some leading companies and establish industrial clusters as a means to optimize industrial structure.

Post time: Jan-18-2022