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China’s 2021 crude steel production has fallen by 3% due to drastic production cuts

© Reuters. Workers wearing face masks are working next to a furnace in Hangzhou, Zhejiang Province, in a Chinese steel plant on February 24, 2020. Via China Daily REUTERS

By Min Zhang and Dominique Patton

BEIJING (Reuters) – China’s annual crude steel production fell for the first time in 2021 in six years as the country fell from a record high in 2020 as its country’s efforts to curb emissions in its vast iron ore sector increase.

The world’s largest steel producer produced 1,030 billion tonnes of crude steel last year, according to data from the National Bureau of Statistics (NBS) on Monday, which fell by 3% from 1,065 billion tonnes in 2020.

Beijing urged the industry not to maintain full-year steel production since the beginning of 2021 above the previous year, to reduce pollutants and greenhouse gas emissions, as the country promised to reach its carbon by 2030.

The target was seen as “negative” as strong declining demand from the construction and manufacturing sectors boosted mill profits and saw China’s steel production rise nearly 12% more than in the first six months of 2020 in the first six months.

However, steel production has been declining every year since the government tightened its environmental controls in July. Unexpected shortages of electricity – fueling commodity prices – and a debt crisis in the real estate market also reduced the demand for industrial metal.

In the second half of 2021, China produced 470.86 million tonnes of crude steel, 16% less than a year earlier in July and December.

In the last month of the year, steel production was 86.19 million tonnes, compared to 69.31 million tonnes in November, but still 6.8% lower than in December 2020, according to the statistics office.

December’s average daily production was 2.78 million tonnes, up more than 20% from a month earlier, according to Reuters estimates based on NBS data.

Looking ahead, analysts expect the upcoming Lunar New Year and the Beijing Winter Olympics to continue to weigh in on production, before gradually increasing consumption after the holidays.

A government adviser predicted that China’s steel demand will fall slightly this year, and that crude steel production will fall by about 0.7% from 2021 onwards.

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