China is expected to continue to cap its steel production in 2022 within 2021 levels as it aims to achieve its carbon goals. But steelmakers, who completed their mandatory output cut requirements for 2021 by the end of November would try to boost their production in December, so that there will be more output quotas for 2022, some market sources said.

          Healthy profit margins are another incentive that could drive China’s steel production higher in December versus November. China’s domestic hot-rolled coil and rebar sales profit margins were $106/mt and $116/mt on Dec. 14, according to S&P Global Platts Analytics.

          Meanwhile, steel output cuts have continued in Hebei province’s Tangshan and Handan cities in December, and these cuts are expected to carry on through the next two months, mostly to reduce smog during the winter months and improve air quality for the Winter Olympics to be held in Beijing over Feb. 4-20. But the output cuts at these two cities are unlikely to deepen in the next few months, sources added.

          China’s crude steel output in the first quarter of 2022 may remain close to but would not exceed the level of 3.01 million mt/day seen in Q1 2021, sources said, adding that Q1 2022 output would be still much higher than November’s level.

-----Steel Business Briefing