By Amy Lv and Tony Munroe
BEIJING/SINGAPORE (Reuters) – Several steel makers in northwestern China’s Xinjiang region began production cuts from Monday, local reports said, after Beijing earlier stated its intent to curb capacity in an industry long plagued by overcapacity.
Among them, Xinjiang Ba Yi Iron and Steel Co, a subsidiary of China Baowu Steel Group, the world’s largest steel producer, plans to cut daily crude steel output by 10% from Monday, media outlet Cailianshe and consultancy Mysteel said.
Xinjiang Ba Yi Iron and Steel and China Baowu did not immediately respond to Reuters’ requests for comment.
While Xinjiang accounted for only 1.3% of China’s crude steel output in 2024, industry watchers said the production cuts signal that Beijing’s push to rein in oversupply that has pushed down prices amid week domestic demand and led to a wave of exports, sparking trade frictions, is having an impact.
Most steel benchmarks on the Shanghai Futures Exchange posted gains on Monday, with rebar advancing 1.23%, hot-rolled coil up nearly 1.28%, and wire rod gaining 1.44%.
During China’s annual parliamentary session this month, the National Development and Reform Commission (NDRC), disclosed its intent to cut steel output but gave few details.
At an industry event on Saturday, Jiang Wei, secretary general of the state-backed China Iron and Steel Association, proposed to close the “entrance” for adding new capacity, China Metallurgical News reported.
In 2021, Beijing began to mandate zero annual growth in its crude steel output to limit carbon emissions.
As a result, steel output in China, by far the world’s largest producer, feel by 5.6% to 1.005 billion tons last year from a peak of 1.065 billion tons in 2020.
(Reporting by Amy Lv in Beijing and Tony Munroe in Singapore, editing by David Evans)
