[SMM Analysis] China's NBS Significantly Revises 2023 Crude Steel and Steel Production Data!

At the beginning of the year, the NBS announced that the 2023 crude steel production was only 1.122 million mt higher than the 2022 figure of 1.018 billion mt, essentially achieving the annual "production cap" target. At that time, the market was in an uproar, questioning the data's credibility.

Recently, the NBS released the "2024 China Statistical Yearbook," significantly revising the 2023 crude steel and steel production data. The 2023 crude steel production was revised up by 9.78 million mt to 1.029 billion mt, and the 2023 steel production was revised up by 21.1 million mt to 1.384 billion mt.

According to the latest data from the 2024 China Statistical Yearbook, the final figures for 2023 crude steel, pig iron, and steel production were 1.0289 billion mt, 872.1079 million mt, and 1.3838 billion mt, respectively. In contrast, the NBS initially announced at the beginning of 2024 that the 2023 crude steel production was 1.0191 billion mt, pig iron production was 871.013 million mt, and steel production was 1.3627 billion mt.

In the China Statistical Yearbook, the provinces with adjusted data include Fujian, Jiangxi, Henan, Guangdong, and Xinjiang, all of which saw varying degrees of increase in 2023 crude steel production.

Now, let's examine the data by product type.

In 2023, the production of galvanized sheets (strips), seamless steel pipes, large sections, medium and wide steel strips, bars, thick steel plates, hot-rolled thin and wide steel strips, and cold-rolled thin and wide steel strips all maintained positive YoY growth. The steel products with significant YoY increases were mostly sheet products, mainly due to the commissioning of nine new hot-rolling production lines in China in 2023, adding approximately 25 million mt of capacity. However, the production of extra-thick plates, wire rods, rebar, heavy rails, and small and medium sections all saw negative YoY growth, primarily because the real estate industry was on a downward trend in 2023, making it difficult to reflect new demand, which in turn forced steel mills to reduce production of these products and shift to sheet products with better demand performance.

Looking ahead, this year, the frequency of strict production restriction policies has not been high. On June 7, the National Development and Reform Commission and four other departments jointly issued the "Special Action Plan for Energy Conservation and Carbon Reduction in the Steel Industry." Subsequently, production restriction notices reappeared in Liaoning, Jiangsu, Shandong, Shanxi, and other regions, but only Fujian Province issued an official document on crude steel reduction. However, according to current data, from January to September 2024, Fujian Province's crude steel production increased by 15.39% YoY, failing to achieve production cap. According to SMM, as of now, only a few steel mills in Jiangsu have reduced blast furnace operations due to production cap policy.

According to the latest data from the NBS, the cumulative crude steel production from January to September 2024 was 768.48 million mt, down 3.35% YoY. In October, steel mill production profits were moderate, and the willingness to increase production was strong. According to the SMM survey, current steel mill production profits still have a surplus, and the number of steel mills undergoing annual inspections and winter breaks this month is still low. Therefore, a neutral forecast for 2024 annual crude steel production is approximately 1 billion mt, which can relatively easily achieve "production cap" compared to the data published in the 2024 China Statistical Yearbook.

By product type, in recent years, the government has introduced numerous real estate support policies, but most involve the digestion of existing properties, making it difficult to stimulate new development area data. Thus, construction material demand may remain sluggish in the medium and long-term, while manufacturing demand remains resilient, and exports stay high. Therefore, in the medium and long-term, sheet production will continue to outpace construction steel production. According to the SMM survey, in 2024, 12 new hot-rolling production lines are expected to be commissioned domestically, with a capacity of approximately 34.9 million mt. In 2025, the capacity increase will decline.