Today, Wednesday, February 26, news has emerged about China planning to cut crude steel production in the 2025-2027 period, bolstering the weak market sentiments seen early this week. Nevertheless, most market sources have been assessing the news as just a rumor at the current stage, as no semi-official announcements have even been made. As a result, there has been minimal support for local steel prices in China and export quotations have remained relatively stable.
According to the market reports, China is going to cut its steel production by 50 million mt in 2025, by 20 million mt in 2026, and by 10 million mt in 2027. The rumors also indicated that Li Qiang, a member of the Standing Committee of the Political Bureau of the CPC Central Committee, is going to sign and formally issue the document next week. In 2024, China's output of crude steel totaled 1.00509 billion mt, decreasing by 1.7 percent or 17.38 million mt from 2023, according to the NBS. So, the rumor about a 50 million mt reduction this year, if true, points to a far more significant year-on-year drop.
Though the reports about these production curbs have been widely discussed, there has not been any confirmation of them even in the local Chinese media. "It is just a rumor now. I checked DeepSeek [the Chinese artificial intelligence company], and still no confirmed news or source for this. The market needed some news, otherwise it is too slow," a large Chinese trader said. Another trader from China said that the recent news may become a reality, but details will be released later.
The abovementioned rumors have resulted in a rise today in rebar and HRC futures at the Shanghai Futures Exchange by 1.24 and 1.18 percent, respectively, compared to the previous day. However, spot prices in China have posted just a minimum increase. The average rebar price in China has inched up by RMB 14/mt ($1.95/mt) to RMB 3,407/mt ex-warehouse, while billet has added just RMB 7/mt ($0.98/mt) to RMB 3,120/mt ex-warehouse. Moreover, the trend in the HRC market has failed to change and the local average price has lost RMB 15/mt ($2.1/mt), according to SteelOrbis' information.
$1 = RMB 7.1732
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