China should cut steel production in 2021

China's sprawling steel industry is expected to produce less raw steel in 2021 than this year's record.

The world's largest steelmaker is set to produce more than 1 billion tonnes of crude steel for the first time in 2020, and a government consultancy recently estimated that production will grow another 1.4% next year amid rapid economic growth and increased investment in fixed assets.

However, Xiao Yaqing, Minister of Industry and Information Technology, called on the steel industry, as an energy-intensive industry, to "decisively" cut production volumes and achieve a year-over-year decline in 2021, Xinhua News Agency reported.

According to official figures, the last time China's annual steel production fell was in 2015. The United States and the EU have long accused the country of having excess steel and aluminum production capacity.

Speaking at the annual working conference, Xiao noted that China has been able to close 150 million tonnes of steel per year ahead of schedule as part of the current five-year plan covering the period 2016-2020 and achieve significant carbon savings.

Nonetheless, low-carbon operations, energy conservation and green production remain priorities for the coming year, the Xinhua report said, adding that a new set of measures will be released in 2021 to implement capacity swaps in the steel sector.

The report does not provide details. In China, steel mills cannot start new capacity until the same or large amounts of old capacity are closed.

The exchange of capacity was banned in January this year, as some companies were found to be abusing the system.