No real good news for Australian investors in the 2021 data on Chinese steel production or coal output for that matter.
Like the weak figures on iron ore imports from last Friday’s trade data, China’s annual crude steel production showed the impact of the government crackdown on emissions and the property sector, with more signs of that negative approach to emerge this year.
In fact China’s crude steel production boom of the past six years ended in 2021, retreating from record levels of 2020 as the country continued efforts to contain carbon emissions in its mammoth metal sector bashing and demand weakened as the property crisis took hold in the final months of the year.
2021 crude steel output was down 3% from 2020’s 1.065 billion tonnes at 1.03 billion tonnes as December’s production recovered strongly from November’s depressed levels.
The National Bureau of Statistics reported that 86.19 million tonnes of crude steel were produced in the final month of 2021, up 24% at 86.19 million tonnes vs 69.31 million tonnes in November.
But that was still 6.8% under the December, 2020 level of 91.25 million tonnes.
Steel output is seen falling further in 2022 to end the year under the billion-tonne level thanks to weak demand expected from property and continuing restrictions on output in northern steel-making cities up to the start of the June quarter.
After soaring 12% in the six months to June, steel production was crimped by at times harsh government controls on emissions and the impact of power shortages in September and October, plus the weaker demand from property and construction in the closing months of the year.
In the second half of 2021, China produced 470.86 million tonnes of crude steel, down 16% from July-December period in 2020 and an annual rate of around 940 million tonnes.
The slide on crude steel output helps explain the drop in iron ore imports in 2021, especially in the second half when China’s iron ore imports slid nearly 10% from the same period of 2020.
Iron ore imports dropped 4.3% last year to 1.12 billion tonnes from 2020’s all-time high of 1.165 billion tonnes.
2021’s total was just above the 1.07 billion tonnes imported in 2019.
Immediately ahead lie the coming Lunar New Year and Beijing Winter Olympics which will weigh on production.
Some analysts reckon consumption will gradually pick up after the holidays but that will be subject to Covid outbreaks and the health of the property sector and any moves by the government to boost activity, such as an interest rate cut which could come on Thursday of this week.
A government consultancy has forecast that China’s steel demand will fall slightly this year, and crude steel production will dip around 0.7% from 2021.
…………
And while the Communist Party government was all concerned about carbon emissions in steel production in late 2021, there was no such worries about coal as President Xi Jinping and his advisors rushed to prevent a repeat of the shock power rationing and shortages of October.
That’s why China’s coal output hit record highs in December and 2021, as the government continued to encourage miners to ramp up production to ensure sufficient energy supplies in the winter heating season which ends on March 15.
No worries about global warming and climate change – the political needs of president Xi and the Communist party trumped the climate and global warming concerns.
China, the world’s biggest coal miner and consumer, produced 384.67 million tonnes of coal last month, up 7.2% year-on-year, data from the National Bureau of Statistics showed on Monday.
This compared with a previous record of 370.84 million tonnes set in November.
For the full year of 2021, output touched a record 4.07 billion tonnes, up 4.7% on the previous year.
Considering coal production fell to a 26-month low in July, the rebound and extra investment shows the extent of the government panic.
Since October, the government has ordered coal miners to run at maximum capacity to help boost production for power station use and control surging coal prices which doubled to more than $US300 a tonne in October amid the rationing and supply problems.
Chinese domestic prices have more than halved since hitting record highs in October last year.
Coal traders in China shrugged off an Indonesian coal export ban as stockpiles at power plants were strong and power demand was set to weaken for the upcoming Lunar New Year holidays.
Coal inventory at Chinese utilities topped 162 million tonnes last week1, or 21 days usage, about 40 million tonnes higher than the same period last year, the state planner National Development and Reform Commission said on Friday.
Meanwhile, China’s 2021 power consumption rose 10.3% year-on-year to 8.31 trillion kilowatt hours (kWh), the National Energy Administration said in a separate statement on Monday.
Trade data released last Friday showed that China imported more than 323 million tonnes of thermal coal in 2021, boosting shipments from October onwards to help fill the hole in power station stocks.
To meet that need, the country also imported 700,000 tonnes of previously-banned Australian thermal coal.
