China churned out 1.05 billion tonnes of crude steel in 2020, rising 5.2% compared with the preceding year, marking the fifth consecutive year for China's production to set new record.

In December alone, the country's crude steel production climbed 7.7% year on year and 4.1% on the month to 91.25 million tonnes, showed data from the National Bureau of Statistics (NBS) on January 18.

China's pig iron and steel products output stood at 887.52 million and 1.32 billion tonnes last year, up by 4.3% and 7.7% respectively compared with the 2019 levels. December production for pig iron and steel products advanced 5.4% and 12.8% year on year, data showed.

China's steel output suffered a rare decline in 2015 as massive overcapacity depressed steel prices, and resumed its growth momentum in 2016 along with the increase of steel prices amid de-capacity drive. The country's crude steel production surpassed 900 million tonnes for the first time in 2018.

The high growth of steel output in 2020 was closely related to the special stimulus policies adopted by the government to deal with the economic downturn caused by the COVID-19 pandemic, said Luo Tiejun, vice president of the China Iron and Steel Association.

Despite the public health emergency, China's GDP still presented a higher-than-expected growth of 2.3% last year, according to data released by the NBS, probably the only major economy in the world to post positive growth in 2020.

However, the strong growth of steel output is less likely to occur in 2021. "Steel demand may gradually return to the original development law with fading effect from the pandemic-induced demand," Luo said.

Further, the domestic environment has been difficult to withstand the continued substantial growth of steel capacity, especially when the country is putting efforts to cut carbon emmision, according to Luo.

In late December in 2020, Xiao Yaqing, minister of the Ministry of Industry and Information called on the industry to resolutely cut crude steel production and ensure an output decline in 2021, as part of effort to peak carbon emission by 2030 and become carbon-neutral by 2060.

Steel sector contributes the most carbon emissions among the 31 categories of manufacturing industry, making reducing emission from the energy-intensive sector an inescapable challenge to the country's carbon neutrality goal.

(Writing by Emma Yang  Editing by Harry Huo)
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