In recent news, the Chinese steel industry is facing overcapacity and imbalances in supply and demand, leading to an “internal competition” price war and a sharp drop in profits for steel enterprises. In 2024, the 36 steel companies listed on the A-share market in China collectively reported a total loss of 13.8 billion yuan. The combined net profit of the top four most profitable listed steel companies in 2024 in China was even less than that of a single Japanese steel manufacturer.
According to reports, the CEO of Japan’s Nippon Steel, who recently acquired a US steel company, mentioned in a media interview that the profits of Chinese steel companies are only a fraction of Nippon Steel’s profits. He stated that due to China’s aggressive low-price tactics, steel manufacturers are currently facing a very difficult situation.
The financial reports of the 36 A-share listed steel companies in China for 2024 revealed that their total operating income reached 1.9529 trillion yuan, with a net loss of 13.8 billion yuan. The top five most profitable listed steel companies were Baosteel with a net profit of 7.362 billion yuan, CITIC Special Steel with 5.126 billion yuan, Nansteel with 2.261 billion yuan, Hualing Steel with 2.032 billion yuan, and Kyoei Special Metal with 1.49 billion yuan.
Research shows that in 2024, China’s Baowu Group led the global crude steel production with over 130 million tons, followed by Ansteel Group. Other Chinese steel companies such as Hegang, Shasteel, Jianlong, and Shougang also ranked among the top ten in the world.
According to data from the China Iron and Steel Industry Association, key steel companies in 2024 achieved a total profit of 42.9 billion yuan, representing a significant 50.3% year-on-year decrease. Even giant domestic steel companies like Baosteel are facing pressure from product pricing and profit contraction, with Baosteel’s net profit declining by 38.36% in 2024.
The President of the China Iron and Steel Industry Association stated earlier this year that due to market imbalances, low steel prices, and soaring raw material costs, the steel industry’s profitability saw a significant decline in 2024. The relentless “internal competition” has disrupted market order and led to a continuous decline in industry performance.
An expert at the Lange Steel Network Research Center pointed out that the high profits of Nippon Steel are attributed to advantages in raw material costs, product structure, and other aspects. Japanese steel companies have historically invested in or controlled high-quality ore resources overseas, giving them a significant cost advantage in raw materials and enabling them to focus on producing high-end steel products with higher profit margins.
Apart from the cut-throat competition within China, the continuous decline in steel product export prices is another important factor contributing to the weak profitability of domestic steel enterprises. Data shows that while China exported 53.67 million tons of steel in 2020 at an average price of $847.2 per ton, by 2024, despite doubling the export quantity to 111 million tons, the average export price plummeted to $755 per ton.
With the rise in steel exports, other countries have initiated 33 anti-subsidy and anti-dumping cases against Chinese steel products since 2024, surpassing the total number of cases from 2020 to 2023. For instance, Vietnam imposed anti-dumping duties of 19.38%, 26.94%, and 27.83% on Chinese steel products in February, while South Korea initiated a preliminary investigation into “carbon steel and other alloy steel hot-rolled plate and thick plate products” imported from China, proposing temporary anti-dumping duties ranging from 27.91% to 38.02%.
In March, the United States implemented a 25% tariff on all imported steel and aluminum products, creating even greater obstacles for China’s massive steel industry in exports. The US believes that cheap Chinese steel is flowing into the country through Mexico, Vietnam, and other nations.