Dominique Patton and Min Zhang

BEIJING, (Reuters) – China’s crude steel production in the year 2021 fell by six years for the first-time in six decades. This is despite the fact that it has fallen from records set in 2020. The country continues to intensify efforts to reduce emissions in its vast ferrous sector.

According to data provided by the National Bureau of Statistics (NBS), the world’s largest steel producer made 1.03 billion tonnes of raw steel in 2017. This was down 3% from 2020’s 1.065 billion tons output.

Beijing had encouraged the industry from the start of 2021 that full-year steel production should not exceed the levels of the prior year in order to decrease greenhouse gas emissions. The country is aiming for a carbon peak by 2030.

This target was deemed “unlikely” as strong downstream demand in construction and manufacturing drove profits to mills. China’s steel output for the first six months of 2020 rose almost 12%, compared with the period prior in 2020.

Steel production started to fall on an annual basis and monthly since July’s tightening of environmental controls. Unexpected power shortages, which fuelled raw material prices, and a crisis in the real estate market have also impacted demand.

China’s crude steel production dropped 16% to 470.86 millions tonnes in 2021’s second half, compared with July-December of the previous year.

According to the statistics bureau, steel production increased by 69.31 millions tonnes in November, but it was 6.8% less than December 2020.

The December average daily output rose more than 20% compared to a month before, according to Reuters calculations based off NBS data.

Analysts expect that the coming Lunar New Year, Beijing Winter Olympics, and other factors will continue to impact production. Consumption should then pick up gradually after the holidays.

An estimate by a government consulting firm predicted that China’s steel consumption would fall this year. Crude steel production is expected to drop 0.7% between 2021 and 2021.