The domestic steel industry, which has fallen into poor business conditions, is increasing its hopes for recovery due to positive developments from China. Recently, China announced a reduction in steel production and is launching large-scale construction projects one after another. If the supply and demand for steel within China improves, the volume exported at low prices may decrease.
On the 25th, steel market analysis company Steel Orbis analyzed that over 2 million tons of steel will be used for the hydropower generation project on the lower reaches of the Brahmaputra River (Chinese name: Yarlung Tsangpo) for which the groundbreaking ceremony was held on the 19th.
The annual power generation capacity of the Yarlung Tsangpo Dam is expected to exceed 300 billion kWh, more than three times that of the existing largest hydropower plant, the Three Gorges Dam. This estimate is based on the fact that about 600,000 tons of steel were used for the construction of the Three Gorges Dam.
The 2 million tons of steel represents about 2% of last year's total steel consumption in China, which was 869 million tons. Steel Orbis analyzed that China will spend $2.5 billion (about 3.4388 trillion won) on steel purchases for this project.
Since 2023, China has been carrying out the extension project of Line 8 of the Guangzhou Metro (project cost about 4.5 trillion won), and in January of this year, it started construction on the China-Uzbekistan railway project. The railway project is worth 11.7 trillion won. The Korea Mine Rehabilitation and Mineral Resources Corporation (KOMIR) noted, "Expectations for the Chinese government's stimulus measures are acting as upward price pressure."
China is also promoting a reduction in steel production. In March, China announced at the National People's Congress of the National Development and Reform Commission (NDRC) that it would reduce steel production to promote industrial restructuring.
In the first half of this year, China's crude steel production reached 514.8 million tons, a 3% decrease compared to the same period last year. According to the Korea Iron & Steel Association, the amount of Chinese steel imported into Korea also decreased by 14% compared to the same period last year, totaling 4.06 million tons in the first half of this year. The industry expects China to reduce its crude steel production by about 50 million tons this year.
An industry source in the steel sector said, "If China reduces its production and carries out large-scale construction projects, the amount of Chinese steel flowing into the domestic market will decrease, which is expected to help the recovery of business conditions."