China’s leading steel mills cut gross profit by 56% y/y in January-September

The operating income of these enterprises during the period decreased by almost 7% on an annual basis

In January-September 2024, the operating income of China’s key steel mills monitored by the China Iron and Steel Association (CISA) decreased by 6.9% y/y – to RMB 4.54 trillion ($0.64 trillion). This is reported by SteelOrbis.

The gross profit of these enterprises amounted to 28.98 billion yuan ($4.1 billion), which is 56.4% less year-on-year.

Jiang Wei, vice president and secretary general of CISA, said that the Chinese steel industry is facing a contradiction between supply and demand. Steel production in the country has fallen slightly, but it still does not meet domestic demand, which is declining at a faster pace.

According to Jiang Wei, the Chinese steel market has not yet formed a new dynamic balance of supply and demand, while steel producers are in a production momentum. However, steelmakers must maintain self-discipline and keep production capacity utilization at a reasonable level.

In addition, according to the Global Times, CISA cites the growth of protectionism in international trade and high raw material costs as problems for the industry. In particular, according to the association, the number of anti-dumping and countervailing investigations against Chinese steel products in 2024 reached 23, and by the end of the year there may be more than 25.

High raw material costs, in turn, lead to a further decline in the profitability of steel companies.

As GMK Center reported earlier, apparent steel consumption in China fell by 6.2% year-on-year in the first nine months of this year. According to WorldSteel’s forecast, demand for steel in the country will decline by 3% this year and by 1% in 2025.