Today in Stainless Espresso: China announces further steel capacity cuts. More than 20 million tons of steel less in Shandong. Demand for steel in India exceeds production capacity according to Jindal managing director. And iron ore prices continue to rise in Asia due to very high demand.
Shandong to cut steel and iron capacity, media say
China’s eastern Shandong province plans to shift or cut a total of 21.41 million tons of steelmaking capacity and 22.38 million tons of ironmaking capacity by 2022, state-backed China Metallurgical News reported Monday.
The local government plans to cut 4.65 million tons of steel capacity this year and the remaining 16.76 million tons in 2022, the report said.
Steel capacity in cities under regions that could affect air quality in the Beijing-Tianjin-Hebei area, such as Binzhou and Zibo, should all be relocated or eliminated “in principle,” China Metallurgical News said.
Shandong is the third-largest steel producer in China. The province produced 79.94 million tons of crude steel in 2020, accounting for 7.5 percent of the country’s total steel capacity output.
Steel capacity reduced: Inner Mongolia and Tangshan Province have already had to massively cut production capacity in 2020 and 2021. This is all part of China’s plan to reduce carbon emissions.
Steel prices may take 2 years to cool down as demand increases
It could take at least two years for steel prices to cool down as demand steadily increases, a senior industry official said.
Demand for steel in India is also expected to exceed production figures in the current fiscal year, Jindal Steel and Power Ltd (JSPL) Managing Director V R Sharma told PTI.
“This year should be the highest production ever. The demand for steel will definitely be more than the production of steel,” he said.
Strong global steel demand lifts Asia’s iron ore benchmarks
Iron ore prices in Asia rose on Monday, buoyed by strong demand for steel products in China and overseas and as Chinese steel mills continued to ramp up production even as the government checks compliance with stricter anti-pollution rules.
The most-traded September iron ore price on China’s Dalian Commodity Exchange DCIOcv1 ended morning trade 1.7% higher at $163.83 per ton, rising for the third straight day.
“Booming steel production continues to support the iron ore market,” ANZ analysts said in a note.
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