China: low carbon steel becomes top priority

As China strives for a cleaner, lower-carbon and more efficient steel sector, analysts expect multinationals to engage in deeper, better-quality cooperation in the Chinese market this year despite the impact of the COVID-19 pandemic.

“China has spearheaded the recovery in global demand in 2020, while overseas demand has been hit by COVID-19,” said Zhu Yi, senior metallurgy and mining analyst at Bloomberg Intelligence.

“Exports from China may increase this year as overseas demand rebounds, which will boost metal production in China and imports of raw materials from overseas mining companies such as Rio Tinto, BHP and Vale,” Zhu said.

The manufacturing sector in China has recovered and is now at pre-COVID levels due to effective stimulus measures in the country, according to fourth-quarter manufacturing results released by Rio Tinto Group Plc in January.

Exports from the country also continue to rise with the global economic recovery, and policy changes to encourage domestic investment and consumption are supporting demand for commodities, the report said.

Iron ore prices rose significantly in the second half of the year amid tightening market fundamentals, and purchases in China remain robust despite continued localized COVID-19 impacts in some regions, according to the Australian global mining giant.

The National Bureau of Statistics reported on January 18 that China's steel production in 2020 exceeded 1 billion metric tons for the first time, up 5.2 percent from the same period last year. This is the fifth year in a row that China has set a record for crude oil production. smelting steel.

Zhu expects crude steel production in China to fall in 2021 amid efforts to cut carbon emissions, despite factors such as rising overseas steel demand and economic stimulus measures that could lead to increased steel production in China in 2021.

"China's crude steel production growth could slow to 1.5 percent year on year this year, down from 5.2 percent in 2020, as refining and processing demand slows after a steady recovery from last year's second quarter." she said.

In January, the Ministry of Industry and Information Technology released for public comment a draft five-year plan for the quality development of the steel industry in China, which calls for more extensive use of scrap metal, increasing the capacity of electricity.