In 2024, the net profits of China’s Hunan Valin Steel Group Co., Ltd. (Valin Steel) and Fangda Special Steel Technology Co., Ltd. (Fangda Special Steel) dropped by 60%, shedding light on the ongoing struggles within the Chinese steel industry.
According to reports from Huaxia Times, as of March 25, seven listed steel companies have announced their 2024 performance, with significant declines in revenue and net profit. Valin Steel recorded operating income of 144.112 billion yuan in 2024, a 12.07% year-on-year decrease. Its net profit attributable to shareholders of the listed company was 2.032 billion yuan, a 59.99% decline, with non-recurring profits sliding by 72.10%. Additionally, the company’s asset-liability ratio stood at 56.02% by the end of December 2024, increasing by approximately 4.35 percentage points compared to the beginning of the year.
Fangda Special Steel has seen a continuous decline in net profit for three consecutive years since 2022. In 2024, the company reported operating income of 21.56 billion yuan, down by 18.67% year-on-year, with net profit attributable to shareholders of the listed company at 2.48 billion yuan, a 64.02% decrease. Furthermore, its non-recurring net profit plummeted by 73.87% to 176 million yuan.
In addition, CITIC Special Steel achieved operating income of 109.203 billion yuan in 2024, a 4.22% decrease year-on-year. Its net profit attributable to shareholders of the listed company was 5.126 billion yuan, a 10.41% decrease. Meanwhile, Xingcheng Special Steel Materials saw its operating income in 2024 drop by 33.76% to 8.074 billion yuan, with its net profit decreasing by nearly 70% to 1.043 billion yuan, marking a 69.37% decline from the previous year.
Moreover, Nansteel Group achieved revenue of 61.811 billion yuan, a 14.79% decrease, but its net profit attributable to shareholders of the listed company reached 2.261 billion yuan, a 6.37% increase. Jiu Li Special Materials saw a slight increase of 0.12% in net profit, while Guangda Special Materials reported a net profit of 1.19 billion yuan, a 9.02% increase.
Companies experiencing losses attributed them to the industry downturn in 2024, with demand-supply imbalances, continuous downstream steel mill order pressures, and relentless high raw material prices leading to steel price drops surpassing raw material price declines, significantly squeezing steel companies’ profits.
In terms of demand, China’s apparent crude steel consumption in 2024 dropped by 5.4% to approximately 892 million tons. In terms of steel usage, the proportion of steel demand in the real estate sector continued to decline, reducing the sensitivity of steel demand to real estate fluctuations. Meanwhile, iron ore, a primary raw material for steel production, experienced price fluctuations in 2024 but mostly remained high. The high and volatile prices of ore, coal, and other raw materials further compressed steel companies’ profit margins.
Analysts predict that the steel industry is likely to remain in a phase of deep adjustment as it enters 2025.
Ge Xin, Deputy Director of the Lang Steel Research Center, told Huaxia Times that external pressures and internal challenges coexist in the Chinese steel industry. While there is significant capacity expansion, demand is weakening, exacerbating supply-demand contradictions, and constraining both upstream and downstream markets. Although the demand for silicon steel is growing, rapid supply expansion has led to price declines, resulting in a double decline in revenue and profits for special steel companies. Future constraints on capacity expansion may suppress both steel plant capacity and output, making it difficult for steel companies to fully pass on increased costs downstream.