Yicai:

Mr. Xiao just responded to issues about various industries such as chips and new energy vehicles. We are also very concerned about the development of the steel industry. According to the 2021 National Conference on Industry and Information Technology, China will resolutely cut the output of crude steel this year. Is there a specific target? Industry watchers expect that the demand for crude steel will exceed 1.1 billion metric tons this year. On the one hand, we need to reduce the output of crude steel, but on the other hand, demand is increasing. Is there any contradiction? How can we deal with that? Thank you.

Xiao Yaqing:

Thank you for your questions, which are indeed issues that many are concerned about. First, since 2016, major headway has been made in the five priority tasks of cutting overcapacity, reducing excess inventory, deleveraging, lowering costs, and strengthening points of weakness. In particular, China has reduced steel production capacity by 170 million metric tons, making significant progress in reducing steel production and capacity. This year, we will continue to work on it. General Secretary Xi Jinping announced at the 75th UN General Assembly that China aims to have CO2 emissions peak before 2030 and achieve carbon neutrality before 2060. We will strive to achieve these high targets, during which the steel industry should take the lead.

There are several reasons why steel is in great demand. First, the rapid economic recovery, the resumption of production and new construction in various industries, are all generating a very large demand for bulk raw and auxiliary materials, including steel. It is also important to see that after the global recession last year, the economy is likely to have some good news this year, so expectations are rising and demand is further increasing.

Second, the per capita use of iron and steel is still in the development process, compared with total economic output. For example, cement, stone, and bricks and tiles are the main materials for construction. Steel consumption is not particularly high, especially in the vast rural areas. In addition, regarding transport, judging from the current number of cars per hundred people and the fact that China's per capita GDP exceeded 10,000 U.S. dollars benchmark, there's plenty of scope for growth. In this sense, the demand for steel is very strong.

Third, from the perspective of energy conservation and emission reduction, the output of iron and steel should be greatly reduced. In terms of the amount, the MIIT is cooperating with relevant national departments to formulate plans. At the same time, we will raise standards and improve the performance of the product, so that the unit steel consumption is further reduced with the total amount remaining unchanged. For example, we will further enrich our varieties of steel and improve their strength, toughness, and quality. In the process of cutting the output, we should pursue intensive development. If we don't exert control over the next few years, the total output of steel may be higher than it is now. Currently, resources are still distributed and the degree of dependence on foreign sources of raw materials and energy is still very high. All these problems need to be solved.

Finally, energy conservation and emission reduction are other key tasks. At present, the unit emission of carbon dioxide per metric ton of steel is declining, but the total amount is still relatively large. The total coal consumption per metric ton of steel has declined. The global average is 575kg of coal per metric ton of steel, but China's figure is 545kg. There is still potential to be tapped in this area given our large total amount. We must take energy conservation and emission reduction as important tasks of the steel industry and continue our efforts.

Thank you.

Shou Xiaoli:

Thank you, Mr. Xiao, Mr. Tian and friends from the media. Today's press conference is hereby concluded. Goodbye, everyone.

Translated and edited by Zhang Jiaqi, Fan Junmei, Zhang Tingting, Huang Shan, Xu Xiaoxuan, Wang Yanfang, Wang Yiming, Li Huiru, Guo Xiaohong, Li Xiao, Wang Qian, Zhu Bochen, Lin Liyao, Wang Wei, Yuan Fang, Zhang Rui, Liu Jianing, David Ball, Jay Birbeck, and Tom Arnstein. In case of any discrepancy between the English and Chinese texts, the Chinese version is deemed to prevail.