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China’s steel production dips to 73.9 mnt in September 2021

By: SteelBis Research


Global crude steel production dropped by 8.9% in September 2021 on year to reach 144.4 million tonnes, of which the world’s top producer and consumer of the metal, China produced 73.9 million tonnes maintaining its position at the top of the list among other countries.

However, China’s September 2021 crude steel output was far lower on a year or year basis, with production down by 21.2% compared to September 2020, and also down 11.2% on month from August where the country produced 83.2 million tonnes of crude steel.

The world’s largest steel producer and exporter has been overhauling its steel sector to reduce waste, promote renewables and unconventional fuel, and reform its electricity network as part of its plan to bring carbon emissions to a peak before 2030, through the introduction of production controls and the retention of domestically needed supplies in the country.

Earlier last week China’s government in a document published on the website of the National Development and Reform Commission (NDRC), announced that energy-intensive industries like steel, aluminium, cement and oil refining should ensure that more than 30% of their production capacity meets tighter energy efficiency standards by 2025. An annex to the document outlined that Blast furnaces must cut 17% of their energy consumption for a single unit of production by 2025.

September, marked the fourth consecutive month where China’s crude steel production has dropped. It is the highest recorded decline after ferrous metal’s output declined 8.4% in July and 13.2% in August.

Meanwhile, since the beginning of the October, steel mills in Jiangsu, Guangdong, and Guangxi have progressively resumed production. As of Octover 13, mills in Jiangsu province had increased crude steel production by at least 25,000 mt/day since the end of September, as power shortage in some areas eased significantly in October, while steel output cuts in H2 September have put most regions back on track to fulfill 2021 energy consumption targets.

Most steelmakers, however, are not likely to run at full capacity, according to sources in these regions, because they will need to curtail output to some extent in 2021 to keep crude steel output near 2020 levels. China has been requesting steel mills reduce production since July to stay on track to meet its pledge to peak carbon emissions by 2030 and become carbon neutral by 2060.


During the first 3 quarters, Beijing’s attempts to keep steel output below last year’s high were met with minimal success, with China’s production up by 2% on annual basis to stand at 805.89 million tonnes in the first nine months of the year, however, the government ramping up its efforts to keep its promises became evident in September when daily crude steel output lowered to 2.46 million tonnes since December 2018, down 8.6% from August’s average, as power shortages in parts of the country and environmental restrictions impeded plant activity.

Moreover, since late August, capacity utilisation rates at 71 electric arc furnaces in China have been declining, falling to 49.22% in the last week of September, down 21.09% from the same period a year ago. Electricity rationing driven by coal shortages.

In terms of end user segments, construction steel demand in September and October was weaker than a year ago, according to several dealers in Beijing, Shanghai, and Guangzhou, and any further increase in demand in Q4 is projected to be capped by a slowdown in the property sector. Analysts therefore expect, if the country continues a similar output in the fourth quarter, total annual production will drop by around 30 million tonnes to slightly over 1 billion tonnes and with this case, the industry will be able to achieve the government’s goal of reducing yearly output.


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