CHINA is considering cutting its crude steel output by about 2.5% this year, said sources familiar with the matter, as it extends a two-year-old policy to curb emissions.

The target was proposed by policymakers at a meeting last week but has not yet been finalized, said the sources, who attended the meeting.

The National Development and Reform Commission, the nation’s top economic planner, yesterday did not immediately respond to a request for comment.

Some officials at last week’s meeting said a cut of 2.5% was too high as the economy was still recovering, the sources said, adding that the target was expected to be set before the end of June.

China’s steel production plans are closely watched by the world’s iron ore miners, who ship about 1 billion tons of the steelmaking raw material to the country each year.

Some of the world’s biggest miners, from BHP Group in Australia to Vale SA in Brazil, rely on China’s steel mills to consume the vast quantities of iron ore they produce, so less demand is likely to weigh on their earnings.

Iron ore prices have rallied in recent months on expectations of strong demand from a recovering Chinese economy, though the National Development and Reform Commission is trying to tackle what it says is a speculation-fueled rally.

China adopted controls on crude steel output in 2021 after pledging to reach peak carbon dioxide emissions by 2030 and achieve carbon neutrality by 2060.

Industry discussion in recent weeks has focused on whether China would continue the policy this year, with the government keen to support economic growth.

Last week, Bloomberg reported that China would continue to curb output this year.

China produced 1.018 billion tons of steel last year, down 1.7% from the prior year, official data show. In 2021, output fell 3% from a record 1.065 billion tons the year before.

Last year, the National Development and Reform Commission confirmed in April that it would curb steel output that year.

China is the world’s biggest producer and consumer of crude steel, which is the backbone of its industrial economy.

The steel sector accounts for about 15% of national emissions, second only to electricity generation. (SD-Agencies)