To meet the environmental target, China must reduce steel production by about 15% in the fourth quarter of this year compared to the same period in 2020.

According to ACB Securities Company’s Q3 Basic Commodity Update report (ACBS), in the first eight months of the year, China’s steel output reached 734 million tons, up 6% over the same period in 2020.

ACBS said that if 6% growth in steel production is maintained for the final quarter of 2021, China cannot meet its environmental target this year. To achieve the plan, the Chinese government must maintain this year’s steel production level equivalent to 2020, at 1,065 million tons. That is, the country must reduce output in the fourth quarter by about 15% compared to the same period last year.

However, China’s steel consumption in 2021 is expected to increase by 6-7% while domestic steel production cannot meet demand and seriously skewed the balance of supply and demand.

Therefore, ACBS believes that China’s plan to cut steel output can open up export opportunities for neighboring countries, including Vietnam. According to the General Statistics Office, in the first 9 months of the year, Vietnam’s steel export turnover more than doubled compared to the same period in 2020. Specifically, the export turnover of this item was 8.43 billion USD, up 1.32 % compared with the same period last year. In which, the Chinese market reached 1.32 billion USD.

ACBS analyst Huynh Anh Huy believes that similar export growth in September can be maintained until the end of this year. Vietnam’s iron and steel exports to China will also increase due to China’s push to build infrastructure. The increase in exports to China can help Vietnamese steel producers maximize their capacity in the context that the recent Covid-19 epidemic has greatly affected domestic steel demand.

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