Recently, Chinese listed steel companies have successively disclosed half-year loss forecasts, with the industry’s losses continuing to expand. Some experts pointed out that the real issue lies not just in the slump in demand due to the stagnant real estate sector, but in the long-standing problem of excessive production capacity. The surplus steel flooding into overseas markets is aggravating trade tensions between China and the international community.
Chinese listed steel companies have been revealing their half-year performance forecasts, and the outlook for the steel sector is not optimistic, facing overall pressures. According to incomplete statistics from “Jiemian News,” half-year performance forecasts from 20 listed steel companies show a significant expansion of losses.
Among them, 15 companies are reporting losses, accounting for 75% of the total. Lingang Steel, Xining Special Steel, Chongqing Iron and Steel, among others, are experiencing growing losses. In addition, companies like Wujin Stainless, Zhongnan Company, Sangang Mingguang, and Xingang Steel have seen their net profits turn from profits to losses in the first half of the year.
Three companies have reported losses exceeding 1 billion yuan each, namely Angang Steel with an estimated net loss of about 2.047 billion yuan, Benxi Iron & Steel with an expected loss of around 1.89 billion yuan, and Anyang Iron & Steel with a projected loss of 1.189 billion yuan.
At the same time, the number of profitable steel companies has notably decreased. Companies like Hualing Steel are anticipating an over 80% year-on-year decline in net profits, while Taigang Stainless Steel’s net profit is expected to decrease by 61.07%-69.97%, and Liugang Company has also seen a significant shrink in profits.
Ge Xin, Deputy Director of the Lange Steel Research Center, told “Jiemian News,” “With oversupply in the domestic steel market, iron ore, coking coal, and coke prices remaining high, the double cost pressures continue to eat away at steel companies’ profits.”
China’s steel industry has been highly dependent on the real estate sector in recent years. However, since 2021, major Chinese real estate companies like Evergrande and Country Garden have defaulted on debts, leading to a continual downturn in steel demand for construction purposes.
According to China’s National Bureau of Statistics, from January to May this year, national real estate development investment, housing construction area, and new construction area all witnessed a double-digit decline year-on-year.
In response to the massive losses incurred by multiple steel companies, Chinese issues expert Mike Li told Dajiyuan that on the surface, the steel industry’s predicament is closely related to the real estate crisis.
He said, “Influenced by the crisis in the Chinese real estate sector, not only has the demand for construction steel plummeted, but also the demand for plate steel products is similarly insufficient.” He further pointed out that the companies experiencing severe losses currently concentrate their product structures in the weakest demand segments.
For example, Angang Steel mainly produces automotive plates, home appliance plates, ship plates, medium and thick plates; Benxi Iron & Steel’s core products include hot-rolled plates, cold-rolled plates, galvanized plates, and automotive plates; Anyang Iron & Steel produces not only construction steel but also medium and thick plates, hot-rolled coils, and more.
Mike Li believes that the common problem these companies face is the concentration of their products in markets experiencing the most severe demand decline, thereby highlighting the pronounced operational pressures.
However, in his view, the shrinking demand caused by the real estate downturn in China is just the surface issue. Citing multiple international statistical data, he pointed out that China’s steel industry’s scale has far exceeded domestic demand.
According to data cited by Reuters, China’s crude steel annual production capacity is around 1.15 to 1.2 billion tons, while the actual crude steel production in 2025 was approximately 960.8 million tons, with a capacity utilization rate of about 80% to 84%. This implies an idle capacity of around 150 to 200 million tons annually.
Since 2025, the Chinese government has introduced multiple measures to tackle steel industry “internal turnover” to curb price wars. However, the increasing number of bankruptcies in the sector in recent times suggests that the effectiveness of these policies is doubtful.
In response to this, Mike Li noted that the competition within China’s steel industry is already highly intensive due to the “internal turnover,” making foreign markets increasingly wary of the impact of China’s extensive steel exports.
As internal demand continues to weaken in China, Mike Li stated that the domestic steel demand has been declining for several years. “With surplus production that cannot be absorbed in the domestic market, approximately 100 million tons flow into the international market.”
Meanwhile, OECD data indicates that the global crude steel total production capacity is around 2.445 billion tons, with China accounting for nearly half. In 2025, the global actual crude steel production was approximately 1.849 billion tons, with China’s production also close to half of the global total.
Mike Li told reporters, “In reality, China has a severe excess steel production capacity.”
The pressures in the steel industry are far from leveling off. He said, “Based on the data released so far, the apparent steel demand in China is expected to further decline in 2026, while the export volume will continue to rise.”
In recent years, China’s massive surplus steel dumping in the global market has become a concern for the EU and many other countries. China’s low-priced, high-volume steel exports not only distort international market prices but also exert significant pressure on the EU’s domestic steel industry.
On July 1st, the EU’s steel import quota regulations officially came into effect. This move aims to protect the EU steel industry from the impacts of global steel overcapacity and unfair trade practices, particularly the market disruptions caused by China’s extensive exports.
According to the Organisation for Economic Co-operation and Development (OECD) forecasts, the global steel production overcapacity is expected to increase to 721 million tons in 2027, over five times the EU’s annual consumption. After the US raised tariffs on most steel imports to 50% last year, the global surplus capacity shifted towards the European market, prompting the EU to introduce this new regulation.
However, on July 28th, the Chinese Ministry of Commerce released a statement titled “China’s Position on the So-Called ‘Overcapacity’ Issue,” denying claims of “insufficient domestic demand in China” and the “impact of China’s overcapacity on the world market.”
Mike Li believes that based on market supply and demand data, there is a significant gap between official statements and realities, with China’s steel industry scale far surpassing domestic demand.
With more steel entering international markets, he predicts that the competition between Chinese steel companies and their international counterparts will intensify further. “Foreign steel enterprises facing China’s massive exports will face increasing competitive pressures, resulting in escalating trade frictions.”