Recently in China, due to consecutive years of losses, South Korea’s Pohang Group has decided to sell its only stainless steel plant in China, Pohang Changjiang Stainless Steel (PZSS), to China’s Qingshan Group for 2.1 billion yuan. The final closure work is currently in progress. The steel industry in China has been facing challenges of weak domestic demand and export restrictions, leading to overcapacity and difficulties for steel enterprises to survive.
Pohang (Zhangjiagang) Stainless Steel Co., Ltd. was established in 1997, jointly invested and built by Pohang Group and Jiangsu Shagang Group, with Pohang Group holding about 82.5% of the shares. It was once hailed as “Little Pohang” in China.
According to a report by South Korean media Chosun Ilbo on Friday, in recent years, due to the impact of oversupply in the Chinese steel industry leading to price erosion, the joint venture plant has suffered losses exceeding 500 million yuan annually, prompting the decision to withdraw from the business. Currently, China’s stainless steel annual production capacity is around 30 million tons, exceeding the consumption volume of about 24 million tons.
In 2024, profits of Chinese steel enterprises saw a significant decline. According to statistics from the China Iron and Steel Industry Association, the total profits of key enterprises in the industry amounted to 42.9 billion yuan, a 50.3% year-on-year decrease, with an average sales profit margin of only 0.71%.
Bloomberg reported that the Chinese steel industry remained in a loss-making state for most of 2024, with soaring debt levels and a record number of loss-making enterprises. Industrial profit data for the first two months of 2025 indicates a grim outlook, as new growth areas are insufficient to offset sluggish construction activities.
Despite the challenging environment, Chinese steel factories continued to produce steel in large quantities, exceeding 1 billion tons last year. Facing both domestic economic slowdown and international resistance, Chinese steel industry finds itself sandwiched – attempting to alleviate overcapacity by increasing exports but encountering higher tariffs imposed by many countries, including the United States, on Chinese steel products.
The China Iron and Steel Industry Association recently criticized domestic car manufacturers for engaging in price wars. The article mentioned that in recent years, auto companies have been demanding steel plants to lower car plate prices to the extreme. Since last year, some automakers have requested price cuts of over 10% for steel plates supplied by steel mills, far beyond the mills’ acceptable capacity.