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In 2023, China's crude steel output defies a two-year downturn, holding steady at 1.02 billion metric tons. The absence of emission caps, coupled with robust demand from shipbuilding, solar, and automotive sectors, offsets property sector challenges. However, December sees a decline, attributed to maintenance and environmental pressures, hitting the lowest monthly output since 2017.

Highlights

Production Stabilization: China's crude steel output in 2023 was approximately 1.02 billion metric tons, showing no significant change from the previous year. This marks a stabilization in production after two consecutive years of decline.

Emission Caps Impact: The decline in steel output in 2021 (3%) and 2022 (1.7%) was attributed to Beijing's implementation of a cap on steel production aimed at reducing carbon emissions.

Policy Changes in 2023: The absence of emission caps in 2023 contributed to the stabilization of steel output. The government's focus shifted towards supporting the economy and reviving the property sector.

Demand Factors: Robust demand from sectors such as shipbuilding, solar photovoltaic, and automotive helped offset a shortfall in demand from the property sector. This diversity in demand sources provided support to the steel industry in 2023.

Rebar Production Decline: Output of steel reinforcing bar (rebar), mainly used in the construction sector, fell by 2.2% in the first 11 months of 2023 compared to the same period the previous year.

December Production Decline: Crude steel production in December 2023 continued to decline for the fifth consecutive month, falling by 11.4% from November to 67.44 million tons. This was the lowest monthly output since December 2017.

Maintenance Activities: The decline in December production was attributed to an increasing number of Chinese steelmakers implementing maintenance on blast furnaces. This was driven by pressure from environmental protection-related production restrictions and widening financial losses.

Daily Output Calculation: The December total production equated to about 2.18 million tons of average daily output, according to a Reuters calculation based on the data.

Conclusion

China's steel industry showcases resilience in 2023, rebounding from emission-related setbacks with stable production and sectoral diversification. While challenges persist, the government's focus on economic support fuels optimism, positioning the world's largest steel producer for continued growth in the coming year. The maintenance-induced dip in December underscores the industry's adaptability, emphasizing the need for sustainable practices amid evolving environmental considerations.

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