SHANGHAI, Jul 13 (SMM) — There have been rumours in the market that China will reduce crude steel production in 2021. However, cumulative crude steel output from January to May announced by the National Bureau of Statistics was 473 million mt, an increase of 61.35 million mt over the same period last year. SMM expects crude steel production in June to increase around 6 million mt on the year. At present, only Anhui and Gansu have announced their production reduction targets, limiting output in 2021 below than the output in 2020. Therefore, SMM believes that crude steel output in 2021 is unlikely to fall, but crude steel production will decline in the second half of the year.

According to SMM survey, steel mills basically undertook maintenance at blast furnaces and production lines to lower their production in the second half of the year. Most of the companies are concentrated in the provinces that have announced production reductions and state-owned and centrally-owned steel mills. Steel mills in other regions will also announce their production restriction plans in the near term. After formulating production reduction plans, steel mills will reduce purchase of steel scrap first and then reduce purchases of iron ore. Steel production has dropped in the off season, according to the announced plans. An increased number of steel mills will conduct maintenance in July, lowering ore prices.