Steel consumption in China will not change in the 23rd year

China's apparent consumption of crude steel is expected to remain largely at 950 million tonnes in 2023, Luo Tiejun, Vice President of the China Iron and Steel Industry Association (CISA), said during the National Scrap Metal Conference in Chengdu in southwest China. Sichuan, 23 February.

“Of course, this forecast assumes a recovery in the domestic real estate sector this year. Otherwise, steel consumption may drop a little more,” Luo said while addressing the more than 1,000 delegates attending the annual event co-hosted by the China Scrap Metal Recycling Association and Mysteel.

Looking back, China's steel industry is facing significant challenges in terms of supply and demand balance and mill profitability in 2022, Luo noted. Crude steel production fell 2.1% year on year to 1.013 billion tonnes last year, while apparent steel consumption fell 3.4% year on year to 960 million tonnes.

On the other hand, domestic steelmakers had to bear high production costs, Luo said. “Continuously high prices for key steel raw materials, especially coking coal, combined with weak demand for steel and lower steel prices, have resulted in a significant decline in mill profitability over the past year.”

For example, the profitability of steel sales among CISA member plants fell 72% year-on-year to less than 100 billion yuan ($14.5 billion) in 2022, Luo noted, citing data from the association, while the debt-to-asset ratio among members rose for the first time once in six years, climbing 0.3 percentage points year-on-year to 61.7% by the end of last year.

“But even more gratifying, the asset structure of our member plants has remained healthy even as their profitability has plummeted,” Luo said.

In order to maintain the high quality development of China's steel industry, this year CISA will continue to strengthen the monitoring and supervision of all steel industry activities while promoting low-carbon steel and smart steel production initiatives.

The association will also encourage member plants to further reduce excess steelmaking capacity, adhere to guidelines for replacing old steelmaking facilities with new ones when planning new capacity, and strive to meet ultra-low emission standards, Luo added.

Another top priority for CISA this year is to advance the Cornerstone Plan to improve China's steelmaking raw material self-sufficiency ratio. The plan, launched in March 2022, aims to increase domestic iron ore production to 370 million tons per year by 2025, a significant increase of 100 million tons per year from 2020 levels.