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“Global Steel Production Changes Under China”: Adapt to Stay Ahead

Steel production in China remains under pressure due to an oversupply of steel in the market.



Chinese steel mills may soon receive orders to cut their production in 2023 in an effort to alleviate the country's ongoing issue with overproduction. The largest steel producer, Baowu Steel Group, has already been given official production targets for control, while other major steel-producing factories have received verbal directives from the government. S&P Global informs about it citing industry sources.


This move could lead to a decrease in China’s overall steel output and increased competition for global suppliers. As China is one of the world's leading producers of steel, this news has the potential to affect the entire steel market. Reducing production could result in an increase in prices due to a shortage of supply. It could also lead to lower wages and job losses in the sector.


Despite the news of production cuts, there has been no clear indication when mills should implement it. The volume of steel output in August is expected to exceed the output in July. The levels of utilization of blast furnace capacity in the country from August 7-11 have seen a continuous increase, reaching approximately 91% compared to 90% at the end of July 2023.


Market participants believe that China’s domestic demand for steel will remain low until the end of 2023, and even with production curbs, steel prices are unlikely to rise significantly. As GMK Center reported earlier, in July Baowu Steel Group received targets for steel production control for 2023.


According to sources, production control targets differ for different subsidiaries of the group. For some it is about restrictions at the level of 2022, for others at the level of 2021. However, in general, the company’s steel production should not exceed last year’s figures. Also, China in January-June 2023 increased steel production by 1.3% compared to the same period in 2022 – up to 535.64 million tons.


For those with an interest in the steel industry, it is likely worth keeping an eye on developments in China and understanding how potential production cuts could impact the global economy.


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