China: Hebei reports steepest crude steel output hike among top 7 producers in Jan-Feb

Crude steel production from China's top seven producing provinces moved up by 6% y-o-y over January-February, 2023 to 169 million tonnes (mnt) compared to 160 mnt in the same two months in 2022, as per data maintained with SteelMint. Except for Jiangsu and Shanxi, the balance five reported an increase in production with Hebei, which enjoys the highest share in the total, showing the steepest rise.

It may be mentioned that China's total crude steel production in 2022 declined by around 20 mnt (2%) to 1,013 million mnt from 1,033 mnt in 2021.

Hebei sees 28% increase in output
Amongst the seven provinces, Hebei is the largest crude steel producer and in January-February 2023 its output grew the highest amongst the seven provinces, by 28%, to 36.50 mnt against 29 mnt seen in the same two months last calendar.

Hebei has the highest concentration of blast furnaces in China and many of these mills ramped up production with the onset of the new calendar in anticipation of demand picking up in the first quarter (Q1).

In fact, China's official data reveals that the country's crude steel production over January-February, 2023 was up 5.6% y-o-y, in expectation of a demand rebound.

Jiangsu: Jiangsu, the second-highest crude steel producing province, however, saw a 5% y-o-y dip to 19.2 mnt against 20.30 mnt in the period under review. Jiangsu, which houses numerous electric arc furnaces (EAFs), is the second-largest province in China, and contributes over 10% of the country's total crude steel production.

This region, being EAF-heavy, is more scrap dependent. But China's ferrous scrap collection has continued to decline since 2022 with upstream suppliers facing challenges in collection amid lockdowns last year, drop in steel demand and recyclers' profits and also a severe winter. Over 700 ferrous scrap recyclers, with capacity of more than 150 mnt per annum, are spread far and wide, making collection a challenging task. Higher quality standards have been limiting supplies too.

Shandong: This province is the fourth-largest crude steel producer in these two months with output at 12.50 mnt, up 15% from 10.8 mnt in January-February 2022.

The fifth-largest producer, Shanxi, showed a 3% decline to 10.30 mnt (10.70 mnt).

Factors that helped output to rise

Stimulus measures: China has rolled out a slew of stimulus measures, particularly in the property segment, as part of efforts to boost the economy post-the severe second Covid surge last year.

Demand rebound seen: The economy is still in the early stages of recovery, although, overall, there is a semblance of stability. Since the manufacturing sector was the first to show signs of a rebound, it significantly drove the demand for manufacturing steel. With the increase in major infrastructure projects, demand for construction steel has also begun to emerge.

Demand for white goods also showed an uptick in January-February. For instance, production of air-conditioners increased 11% y-o-y in these two months while washing machines and refrigerators upped 2% and 8% y-o-y respectively.