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China's steel industry may already have hit peak carbon emissions: sources

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China's steel industry may already have hit peak carbon emissions: sources

Highlights

China releases new carbon peaking action plan

Steel industry seen maintaining annual output below 2020 levels

Action plan calls for promoting scrap usage in steelmaking

The targets under China's new action plan that aims at peaking carbon emissions are expected to be easily met by the domestic steel industry, as production and related emissions may already have peaked in 2020, industry sources told S&P Global Platts Oct. 27.

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China's State Council released the national carbon peaking action plan late Oct. 26 that called for steel industry to continue capping its iron and steel making capacity, especially around Beijing, Tianjin and Hebei regions. Such move, the council said, would help in reaching peak carbon emissions by 2030.

However, China's steel industry has been in action since very early this year, bracing for production controls in regions like Tangshan, which is China's largest steelmaking city.

Later, China's steel industry started working toward keeping its 2021 crude steel output within 2020 levels, after authorities from July started sending signals to the industry for implementing output cuts, a move that was also seen as part of the country's broader goal of reducing carbon emissions.

Over January-September, China's crude steel output reached 805.89 million mt, up 2%, or 15.8 million mt, on the year, according to China's National Bureau of Statistics.

If China's daily crude steel output over October-December is maintained at the September level of 2.458 million mt/day, the country's crude steel output in 2021 is set to fall 3% from 1.065 billion mt in 2020 to 1.032 billion mt, Platts calculations showed.

Moreover, the industry has planned to keep 2022 steel output within 2021 levels, some mill sources said.

The policy of capping annual steel production within previous year levels is likely to continue for the foreseeable future, which indicates crude steel production of 1.065 billion mt in 2020 was the peak for China's steel industry, industry sources added.

Meanwhile, the action plan reiterated to promote utilization of scrap in steelmaking and installation of electric arc furnaces. It also encouraged the development of hydrogen metallurgy and the technologies of carbon dioxide capture and utilization.

While it may seem China's steel industry may already have hit peak carbon emissions, achieving carbon neutrality will be a challenging and costlier affair, sources said.