Chinese steel prices rose March 24 after two Xinjiang-based mills said they reduced crude steel production in response to a government directive to curb 2025 output.

Prices rose on market hopes that output reduction announcements from these two steel mills may indicate the

possibility of broader government-mandated steel output cuts in the near future.

Privately owned Kunyu Iron and Steel and state-owned Bayi Iron and Steel, both located in western China’s Xinjiang Uygur Autonomous Region, said they have reduced crude steel output by 10% from March 24, in accordance with the National Development and Reform Commission’s call to implement production control.

The two mills did not specify how long the output cuts would last. However, market participants said the reduction in steel output at these mills could have a minimal impact on China’s overall iron and steel production.

On March 14, China’s National Development and Reform Commission announced its intention to continue curbing crude steel production for 2025, but specific targets or measures for these output cuts have not yet been detailed.

According to the National Bureau of Statistics (NBS), crude steel output in the Xinjiang region was just 12.9 million mt in 2024. Even if the 10% output cuts are implemented by the whole region, they will result in an annual output decline of just 1.29 million mt, accounting for 0.13% of China’s total crude steel output.

“It is also questionable whether the output cuts in these Xinjiang-based mills are to follow government output cut orders, or, as a matter of fact, more to do with disappointing profits due to poor local demand,” said a market participant.

He added that China’s major steelmaking hubs, such as Hebei and Jiangsu provinces, have not implemented government mandated output cuts as most local mills continue to operate with decent profits.