China’s crude steel output dropped more than 10% to around 243 million tonnes (mnt) in January-March, 2022 against 271 mnt seen in the same period of 2021, as per data available from the country’s National Bureau of Statistics (NBS).
The volume in March, 2022 dipped 6% to 88 mnt against 94 in the same month last calendar year.
Reasons for the y-o-y drop in Q1 crude steel output:
- Covid surge: Output in the first quarter (January-March) was down because of the Covid outbreak in March, which forced Tanghshan, China’s key steel-making hub, to go into a strict lockdown from the third week of the month. This limited crude steel production and Tangshan’s contribution to the national output volume.
- Games impact: China undertook huge preparations for the Beijing Winter Olympic Games, held over 4-20 February, 2022, to implement a “blue sky” policy. In the run-up to the Games, several polluting industries, including steel, were told to cut production to reduce pollution levels. This also impacted Q1 crude steel output.
- Lunar holidays: That apart, the country celebrated the week-long Lunar New Year holidays from 1 February, 2022, which kept production low.
The reduced production levels also resulted in a drop in sales. However, demand picked up somewhat towards end-March, although the inventory reduction speed in this month was slower than that of last year because of the surge in Covid cases.
In any case, China has been focusing on reducing crude steel output in order to meet its decarbonization goals. Total crude steel output in 2021 was 1.03 billion tonnes against 1.06 bnt in 2020 as per NBS data.
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