CONF: China's special steelmakers must go green to win global market share

Liu Jianjun, general secretary of the China Special Steel Enterprises Association, told delegates that currently, China's special steel accounts for just 10-15% of global trade in the commodity, far below countries such as Sweden (45%) and Japan (20%), and said this represented significant untapped potential.

Liu noted that China's market for carbon steel, whose development was driven by the needs of industrialization and urbanization, is already grappling with oversupply and declining demand, particularly from the real estate and infrastructure sectors.

In contrast, the potential for special steel remains strong, with industries such as automotive and machinery manufacturing, and aerospace, emerging as key consumers, Liu remarked, observing that global demand for special steel will likely grow in coming years. Were Chinese makers to be active in meeting this demand, this would help to counterbalance the stagnation in carbon steel demand, he argued.

Liu predicted that by 2025, China's crude steel production would fall to 950 million tonnes, down from 1.05 billion tonnes in 2023, while special steel production is expected to rise to 83 million tonnes from 77.85 million tonnes over the same period. The divergence between crude carbon steel and special steel production will largely stem from increasing global demand for specialized materials, he told delegates.

Liu also emphasized that transitioning towards greener steelmaking is crucial for the future development of the specialty steel industry.

Echoing Liu's comments, Hui Rong, a technical expert from Citic Special Steel in East China's Jiangsu province, stressed that many carbon steel producers are shifting their focus to special steel due to the sluggishness of domestic demand for construction steel which is causing their business losses to mount.

The need for steelmakers to embrace green technologies and lower their carbon footprints is crucial, particularly in light of the growing global trend to mandate such developments through regulation, such as the European Union's Carbon Border Adjustment Mechanism (CBAM).

Hui explained that the EU's CBAM, set to be fully implemented from 2026, will impose a carbon tax on commodities and goods including steel whose manufacture involved high levels of carbon emissions. Unless a greener production path is pursued, Chinese special steel producers could face additional fees ranging from Yuan 131 to 500 ($18 to $68.8) per ton imposed on their exports to the EU, a burden that could far exceed current profits, he warned.

Written by Adele Pan, panqinjie@mysteel.com      

Edited by Russ McCulloch, russ.mcculloch@mysteel.com