According to five sources with knowledge of the situation and analyst reports, certain Chinese steel mills have been instructed to cap this year’s output at the same level as 2022. This could reduce the demand for iron ore in the largest steel market in the world.
Four sources, including two who added that the orders were conveyed yesterday, claimed that three mills operated by the state-owned China Baowu Steel Group, the largest producer of steel in the world, had received verbal instructions that their output could not surpass that of 2022.
All of the individuals declined to be identified due to the sensitivity of the situation and made no mention of whatever authority issued the commands. A Baowu public relations official said he had no information to share on the matter.
For the past two years, China has mandated zero output growth in the steel industry in an effort to reduce carbon emissions from one of its most polluting sectors.
The state planner disclosed the zero growth target in the second quarter of 2021 and 2022, but this year, no such declaration has been made, putting the market in the dark about Beijing’s intentions.
According to data from the National Bureau of Statistics, China produced 535.64 million metric tonnes of crude steel in the first half of the year, an increase of 1.3% from the same time in the last year.