The first news from the Two Sessions meeting in China has been rather positive and has supported the mood in the steel market to a certain degree. However, as for steel production cuts for 2025, the target has not been specified and, according to some signals, it may be much smaller than rumored recently, SteelOrbis has learned from the market on March 6.
China’s central government has announced that GDP growth target for 2025 has been set at a stable five percent, which is higher than expectations. As decided at the Two Sessions government meetings in Beijing, China aims to issue RMB 4.4 trillion ($0.6 trillion) of local government special bonds in 2025, up by RMB 0.5 trillion from 2024, while ultra-long special government bonds will amount to RMB 1.3 trillion ($0.18 trillion), increasing by RMB 0.3 trillion year on year. The funds will be used to boost construction of the projects already started, as well as for the replacement of old consumer goods with new ones.
Regarding local steel demand in 2025, the Chinese authorities stated that it will support an increase of the use of steel in the manufacturing industry to partly offset the decline in construction steel demand, so, general domestic steel consumption is expected to fall at a smaller pace in 2025. As announced in late December 2024 by China Metallurgical Industry Planning and Research Institute (MPI), China's steel demand will decrease by 1.5 percent in 2025, versus an estimated 4.4 percent drop in 2024.
No further details have been provided regarding steel production cuts in China in 2025. However, the plan for a reduction in energy consumption and emissions is in place and China’s government is going to save about 20 million mt of standard coal and reduce carbon dioxide emissions by about 53 million mt in 2024 and 2025. According to market sources, in 2024, around 10-12 million mt of standard coal was saved, considering the crude steel production cuts. So, in 2025, to reach the target, Chinese mills in total will have to cut steel output by around 15-20 million mt. “The previous rumor that the crude steel production cuts will be 50 million mt in 2025 is not realistic as for me. The curbs are needed and will happen for sure, but not that much,” a Chinese trader commented to SteelOrbis.
“The low concentration of the steel industry has been a problem for many years. At present, the industry has shown a good momentum in mergers and acquisitions, which is also one of the directions for the future development of the industry,” Li Shiping, deputy of the National People's Congress and former chairman of China Baowu Central South Steel had said during an interview after the opening of the Two Sessions meetings.