China’s iron and steel industry has fared well since the beginning of this year, as per a media report in that country, with profits hitting record highs. But can the industry maintain such profit levels next year? Should crude steel output continue to be reduced? How will green and low-carbon steel development be promoted?
The China Iron and Steel Industry Association (CISA) and the Metallurgical Industry Planning and Research Institute (MIPRI), tried to answer these questions while participating in a recent iron and steel technology seminar.
Over Jan-Oct’21, China produced 87.05 million tonnes (mn t) of crude steel, a marginal dip of 0.7% y-o-y. This is the first decline in China’s cumulative crude steel output this year. Considering that this year’s autumn and winter production limits are stricter, in a bid to protect the environment, the goal of reducing crude steel output for the whole year is guaranteed to be achieved. Many steel companies are concerned about whether they will continue to reduce crude steel output next year, informs Lange Steel.
Qu Xiuli, vice-president and secretary-general of the China Iron and Steel Association, speaking at the seminar, said: “In the later period, including next year, no matter whether the country restricts production or not, we want to increase our production substantially. It may be that we lack a certain foundation. But our demand can become more sustained and our output can also remain stable or decline slightly. May be, the entire market should be in a relatively balanced situation of supply and demand then.”
Where overseas demand is concerned, the World Steel Association predicts that next year’s global steel demand will increase by 2.2%, which is significantly lower than this year’s growth rate. China does not encourage exports of general steel products and has cancelled the export tax rebate on steel products. Qu Xiuli predicts that steel exports will hardly grow significantly in Dec’21 and next year, and may even decline.
Costs to increase
In terms of cost, she believes it will increase further next year.
Qu Xiuli said: “Although the price of ore has gradually reduced through various measures, it is still at a high level. The price of coal, coke, and, in fact, the price of energy is still very high. In the later stage, the steel industry will implement ultra-low emission standards to promote carbon peaking and carbon neutralization, which will further increase capital investment and operating costs.”
Li Xinchuang, Secretary of the Party Committee and Chief Engineer of the Metallurgical Industry Planning and Research Institute pointed out that the current development of China’s steel industry is happening in “three phases” of accelerated joint reorganisation, strengthening environmental protection and low-carbon development.
He stressed on the urgency of green and low-carbon development, and that companies must attune themselves to implement such measures.
Li Xinchuang suggested that there should be differentiated policies for different steel products. For instance, exports of high-end steel, restricting exports of commercial grades should be encouraged, while imports of raw materials and primary products such as scrap and billets should be promoted to allow development of the electric furnace short-process steelmaking technology.
Domestic crude steel output should be reduced, along with energy consumption so that China’s steel industry can achieve its carbon peak and carbon neutral goals as soon as possible.
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