A number of Chinese steelmakers have started to cut production

Some Chinese steel mills have begun to cut production as the industry is pressured by oversupply and low profitability, Bloomberg reports.

According to a report by consultancy Mysteel, four steelmakers in Xinjiang have announced a 10% cut in production since the beginning of this week. However, this will have a limited impact on the market as a whole. According to the National Bureau of Statistics, last year the northwestern region accounted for only 1.3% of national steel production.

The companies that have taken this step are Xinjiang Ba Yi Iron and Steel (a division of China Baowu Steel Group), Xinjiang Kunlun Steel, Xinjiang Minxin Iron Steel Group, and Xinjiang Kunyu Iron & Steel.

According to Mysteel’s estimates, this will lead to a reduction in daily steel production in the country by about 2 thousand tons (total daily production in China is almost 3 million tons).

The announcement comes after the government announced in early March that it would restructure the steel industry by cutting production in the sector at the annual legislative meeting.

In addition, the China Iron and Steel Association (CISA) proposes to stop adding new capacity, SteelOrbis reports.

Jiang Wei, vice president and secretary general of CISA, said at a specialized conference that the main factor affecting the development of the industry is the imbalance between supply and demand. According to him, last year the Chinese steel industry faced a profound restructuring amid dramatic changes in the long products segment. Due to the weak performance of the real estate industry, downward pressure on demand for these products increased.

Jiang believes that it is necessary to effectively stop the commissioning of new capacities while creating conditions for the decommissioning of obsolete ones. In his opinion, the industry should also
pursue scientific and technological innovation, focus on niche markets and achieve greater added value, and continue its green and low-carbon transformation.

As GMK Center reported earlier, in January-February 2025, China’s steel industry reduced steel production by 1.5% year-on-year – to 166.3 million tons. At the same time, steel exports in the period increased by 6.7% y/y – to 16.97 million tons.