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Experts say that China will continue to curb steel production again this year as it did last year. Accordingly, attention is focusing on whether Korean steel makers’ price negotiation power will increase as the amount of low-priced Chinese steel products will be reduced.
According to foreign media outlets and industry sources on March 23, it is known that China will continue to cut down on its annual crude steel production this year as it controls carbon emissions from industries which recorded excessive carbon emissions. China’s crude steel production recorded a record high of 1.053 billion tons in 2020, followed by 1.035 billion tons in 2021 and 1.013 billion tons in 2022, showing a downward trend for two consecutive years.
The Chinese government has started to directly cut the production of steel products in earnest as it set the year of 2030 as the peak year of its carbon emissions and wants to see those carbon emissions shrink after that year. The Chinese steel industry accounts for about 15 percent of China’s annual greenhouse gas emissions. In addition, a slowdown in the real estate market, which takes up more than a third of China’s steel demand, also affected the decision for the production cut. Demand decreased as upstream industries contracted coupled with a zero coronavirus policy.
Those in the Korean steel industry expect that Korean steelmakers will benefit from this change as the inflow of Chinese steel products to Korea will decrease, increasing Korean products’ bargaining power. In the meantime, the Korean market has suffered from an oversupply issue due to the penetration of low-priced imported goods into the Korean market. There were concerns about a market disturbance if some Korean steel products were to lose a price war with those from China.