Chinese steelmakers cut losses in January-October amid economic incentives

In January-October this year, Chinese steelmakers reduced their total losses to about 23 billion yuan ($3 billion) compared to 34 billion yuan in the first 9 months of the year. This was reported by Bloomberg with reference to the State Statistical Office.

At the same time, overcapacity and the impact of the real estate crisis in China on demand still make the steel industry one of the worst performing sectors of the economy.

The announced economic stimulus and government efforts helped to increase production in the steel industry and boost prices in October this year.

Overall, the sector has revived over the past couple of months, helped by near-record exports and low inventories. Production also seems to have continued to grow until November, despite the onset of the low season, when activity usually declines.

A recent survey by Mysteel showed that more than half of its plants are profitable after margins collapsed earlier this year.

However, favorable conditions may not last long. With the colder weather, construction in the country will slow down, increased global protectionism is likely to curb exports, and Beijing’s incentives are not aimed at those sectors of the economy that are most important to the steel market, such as housing construction or large-scale infrastructure.

In general, the total profit of large industrial enterprises of Chinese companies in January-October 2024 decreased by 4.3% compared to the same period last year – to 5.868 trillion yuan ($809 billion).

As GMK Center reported earlier, in October 2024, China’s steelmaking companies increased steel production by 6.2% compared to the previous month and by 2.9% compared to October 2023, to 81.88 million tons. Over 10 months, this figure decreased by 3% compared to the same period last year to 850.73 million tons.