Iron ore futures rebounded from a dip previously, as market participants were more cautious, after regulators warned of false prices information that manipulated the market.
The futures of Dalian Commodity Exchange (DCE) for May delivery then rose by 3.20% day-on-day or up RMB 25.50 to RMB 821/mt, during the day trading session on Thursday.
The rebar futures also went up by 1.52% or up RMB 74 to RMB 4,955/mt, during the day trading session.
China’s annual steel production to be maintained at 2021 level
China’s 2022 crude steel output will be capped within 2021 levels, as many mills were notified verbally, according to trade sources.
Hence, the targeted production will be ranged around the 1 billion mt, as the country placed more stringent measures to reduce emission and had since pushed back its peak carbon emission to 2030, instead of the previous target year of 2025.
Therefore, mills were given more time to transform their operations toward low carbon industry, while state regulators will implement more measures to ensure price stability.
In the meantime, there were also more emission curbs during the year of 2022 for major sporting events like the Winter Olympics in February and later for the Asian Games held in Hangzhou in September.
More consolidation in steel industry amid rising decarbonization costs
The green initiatives also implied another round of consolidation of the steel industry, as bigger and economic of scale mills tend to stand better chances in absorbing the costs in reducing emissions.
Besides, the larger mills had more deep pockets to diversify in increasing the use of electric arc furnaces and invested in hydrogen furnaces to comply to the stringent emissions regulations.
For instances, the major mills like Baosteel, Hebei Iron & Steel, Xingtai Iron & Steel and Fushun New Steel planned to build their first hydrogen furnaces by 2022-2024 period with a total pig iron capacity of 3.43 million mt/year.