China is set to compel its steel industry to reduce output in a move to alleviate a significant oversupply and revitalize profitability within the sector. The National People’s Congress in Beijing announced on Wednesday that authorities will promote industry restructuring to achieve production cuts. This decision comes as the steel industry faces substantial challenges due to the ongoing downturn in the property market. Market analysts are speculating that potential reductions could reach up to 50 million tons annually.
Despite previous attempts by Beijing to curb output by linking it to carbon emissions, annual steel production in China, the world’s largest producer and consumer of the alloy, has remained consistently above 1 billion tons. The government’s renewed focus on mandated cuts is driven by a sharp decline in earnings at steel mills and increasing international pressure related to accusations of dumping surplus steel on global markets.
These mandated cuts signify a more assertive approach by the Chinese government to manage its steel industry and address both domestic economic concerns and international trade tensions. The effectiveness of these measures will be closely watched, as they could have significant implications for global steel prices and trade flows.
