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| China steel production cuts |
Northern China Steel Mills Implement Temporary Production Cuts
China mandates several northern steel producers to cut output starting March 4, aiming to improve air quality during the National People’s Congress. This reduction targets at least a 30% decrease in blast furnace operation, according to Mysteel data. Meanwhile, analysts highlight that these cuts are customary measures preceding the annual parliamentary session, aligning with environmental compliance policies.
Market Implications and Inventory Management
As a result, the seasonal accumulation of steel product stocks is likely to slow down. Xin Ge, deputy director at Lange Steel, emphasizes that this production adjustment could support steel prices. Furthermore, the combination of anticipated stimulus measures and higher steel prices may prompt mills to replenish raw material inventories, preparing for the next production ramp-up in March.
Steel Demand Trends and Production Outlook
In March, steel demand typically rises due to the resumption of construction activity amid warmer weather. However, Chinese steel production fell to 960.81 million tons in the previous year, marking a 4.4% year-on-year decline. This drop reflects prolonged weakness in the real estate sector, which constrained domestic demand for steel products.
ScrapInsight Commentary
The northern China production cuts are likely to temporarily tighten steel supply, supporting domestic price stability. Analysts expect inventory replenishment and government stimulus to sustain demand in Q2. This move also reinforces the ongoing alignment of steel production with environmental regulations and circular economy principles.
