The Chinese Steel Industry: Current Situation, Challenges and Prospects

In the global steel arena, China, being the world's largest producer and consumer of steel, has always been in the spotlight regarding the development trends of its steel industry. As disclosed by industry insiders, the demand for steel in China is likely to level off or dip slightly in 2025. Meanwhile, with trade frictions escalating continuously, the risks confronting steel exports are also mounting, which undoubtedly poses numerous challenges to the Chinese steel industry.

In terms of the market supply and demand dynamics, at present, the decline in demand is evidently faster than that of supply. The oversupply resulting from this imbalance between supply and demand has exerted a tremendous impact on the steel market. Steel prices have been persistently under pressure, and the profitability of numerous steel manufacturers has been severely undermined. To alleviate the pressure in the domestic market, some manufacturers have been compelled to shift their focus to overseas markets and increase their overseas shipments.

Looking back on the data for the first three quarters of 2024, China's apparent steel consumption dropped by 6.2% year-on-year to 688 million metric tons. The China Iron and Steel Association (CISA) stated in a report released on its WeChat official account that this year's steel consumption is expected to be below 900 million metric tons and will remain at around 800 million metric tons until 2035. As for crude steel production, official data released last week indicated that China's crude steel output in the first three quarters of 2024 decreased by 3.6% year-on-year to 768.48 million metric tons. Nevertheless, the CISA forecasts that this year's total crude steel output is likely to stay above 1 billion metric tons. Since 2021, when the Chinese government started to impose a cap on annual growth to control carbon emissions, China's steel production has been on a downward trajectory.

It is worth noting that the structure of steel consumption in China is undergoing profound changes, with the focus gradually shifting to the manufacturing sector. In recent years, the property market has been in a prolonged slump. Given that the property sector used to be the main consumer of steel in China, steel manufacturers are now struggling to survive amid the continuous contraction of demand. Jiang Wei, vice chairman and secretary-general of the CISA, said, "This year, the demand for steel from the manufacturing sector will climb to around 50% or even higher, which brings both new opportunities and challenges to the steel industry."

Furthermore, in terms of industry concentration, there is still a certain gap between China and some developed countries. In the first three quarters of this year, the market share of China's top 10 steel producers was 40.9%, while in some developed countries, the market share of the second to fourth largest steelmakers ranged from 65% to 85%. This implies that the Chinese steel industry still has a long way to go in integrating resources and enhancing industry concentration.

For professionals in the steel field, every change in the Chinese steel industry has a significant impact on the entire industry. Whether it is the fluctuation in demand, the adjustment of the consumption structure, the risks faced by exports or the improvement of industry concentration, all these aspects require our close attention and in-depth study. Only by comprehensively understanding these changes can we identify the right direction in the complex and ever-changing market environment and jointly promote the sustainable and healthy development of the Chinese steel industry.