SMM will keep an eye on follow-up development in other regions after Fujian officially issues crude steel reduction document, the first province in China for introducing such measure 

Recently, there have been continuous rumours about production restrictions in the steel industry for 2024. On June 17, Fujian Province issued the first official crude steel production reduction document, "Notice on 2024 Crude Steel Production Control Task and Convening a Work Deployment Meeting." If this document is implemented, what will be the crude steel production level in Fujian in H2? According to SMM's calculations, the upper limit of Fujian's crude steel production this year is: 35.975 million mt * 85% = 30.5786 million mt. In 2023, the annual crude steel production in Fujian Province was 34.055 million mt. This means Fujian needs to reduce its annual crude steel production by 3.4764 million mt or 10.21% YoY in 2024. Based on this, the monthly breakdown is as follows:

According to SMM's calculations, in order to achieve the target of annual crude steel reduction of 3.4764 million mt in 2024, the total crude steel output should be capped at 14.0833 million mt during June-December, down 29.64% YoY. From June to December, the average monthly output should be capped at 2.0119 million mt, down 39.02% compared to the average monthly output in January-May this year, and down 42.93% compared to May 2024.

According to SMM survey, currently, only Fujian has received the official document; Shandong has basically confirmed a reduction of 2 million mt but has not yet received the official document. SMM will continue to track and survey subsequent news related to production reductions and restrictions in other regions.