<article><p class="lead">China's ministry of industry and information technology (MIIT) said the country's steel industry must reduce its crude steel output in 2021, as part of low-carbon initiatives under the country 14th five-year economic plan for 2021-25. </p><p>China's 1bn t/yr steel sector, as an energy-intensive industry, "must resolutely" reduce steel output to ensure a year-on-year decline, MIIT minister of industry and information technology Xiao Yaqing said during a 28-29 December work conference, according to state-owned media Xinhua.MIIT next year will promote low-carbon initiatives and green projects, increase efforts to reduce steel output and issue new rules for steel sector capacity replacements. </p><p>China's most active futures for iron ore fell by more than 5pc, while rebar and hot-rolled coil rose modestly in morning trade today after the MIIT statement.</p><p>"The government will probably increase steel production restrictions to reduce the crude steel output next year, which may affect the iron ore blending ratios in the blast furnaces," a Beijing iron ore trader said. </p><p>Chinese steel traders expressed scepticism that restrictions will limit output with high steel profits encouraging output. The policy instead aims to rein in iron ore price increases, they said. </p><p>Iron ore prices touched nine-year highs this month as seaborne supplies are stretched by China's record steel output and a post-Covid-19 lockdown rebound in other regions. </p><p>China has committed to <a href="https://direct.argusmedia.com/newsandanalysis/article/2143729">carbon neutrality by 2060</a> and is expected to <a href="https://direct.argusmedia.com/newsandanalysis/article/2154259">increase steel scrap use under the latest five-year plan</a>. </p><p>The 2016-20 five-year plan saw China expand its more environmentally-friendly manufacturing and cut 150mn t of outdated steel capacity ahead of schedule, while energy consumption per unit of industrial output dropped significantly. </p><p>Chinese steel producer China Baowu Steel Group has signed agreements with UK-Australian iron ore mining firms <a href="https://direct.argusmedia.com/newsandanalysis/article/2157888">BHP</a> and Rio Tinto to invest a total of $45mn in low-carbon steel projects. Baowu, the world's largest steel producer since 2019, will produce more than 100mn t ofcrude steel for the first time in 2020. </p><p class="bylines">By China staff and Chris Newman</p></article>
