China: Crude steel production remains stable y-o-y in CY'23

China's crude steel output for the CY'23 remained consistent y-o-y at 1.02 billion tonnes (bnt), according to the data provided by the National Bureau of Statistics (NBS). The absence of emission caps, combined with strong demand from sectors such as shipbuilding, solar, and automotive, played a role in stabilizing steel output. Notably, this stable output followed two consecutive years of decline.

However, December 2023 output fell by 11% m-o-m to 67.44 million tonnes (mnt) against 76.1 mnt in November 2023. December saw a decline, attributed to maintenance and environmental pressures, hitting the lowest monthly output since 2017.

On a daily average basis, crude steel output fell to 2.175 mnt in December, down by 14.3% m-o-m from 2.537 mnt in the previous month.

Highlights:

Emissions cap impact: In an effort to address carbon emission concerns, the Chinese government implemented production caps on the steel industry, resulting in a decrease in output of 3% in 2021 and 1.7% in 2022. The subsequent suspension of these caps in 2023, along with a focus on economic stimulus and property sector recovery, contributed to the stabilization of steel production.

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.

Outlook:

Demonstrating remarkable resilience, China's steel industry rebounded from prior emission-related challenges in 2023, achieving production stability and pursuing sectoral diversification. Despite ongoing hurdles, government support and a focus on diversification promise further growth for the world leader. A brief December dip due to maintenance shows the industry's flexibility, highlighting the need for sustainable practices as environmental considerations continue to shape the landscape.