Chinese steel industry reduced profits by 4.7% in January-August 2024

The profits of major industrial companies in China increased slightly by 0.5% y-o-y in January-August 2024, reaching 4.653 trillion yuan (USD 664 billion). However, in August, these companies' profits fell by 17.8% compared to the same month last year, the sharpest decline in a year.

In terms of specific industries, the steel sector experienced a 4.7% y-o-y decline in profits during the first eight months of the year, totaling 5.233 billion yuan (USD 746 billion). Meanwhile, state-owned enterprises recorded a 1.3% drop in profits over the same period, while non-state enterprises saw a 2.6% increase. Foreign industrial firms, on the other hand, reported a stronger performance with a 6.9% rise in profits compared to last year.

Additionally, in late September, China’s central bank introduced a major financial stimulus package, the largest since the COVID-19 pandemic began. The measures include a 0.5 percentage point reduction in the reserve requirement ratio (RRR) for banks, freeing up around 1 trillion yuan (USD 142 billion) for new loans. The interest rate on seven-day reverse repurchase agreements was also lowered from 1.7% to 1.5%. As a result, iron ore prices have shown positive movement, though analysts remain cautious about future trends.