China’s largest steelmaker Baoshan Iron & Steel Co. (Baosteel) has warned that measures to keep China’s steel output steady in 2024 may not be enough to address the industry’s ongoing supply glut and the resulting losses.
China, the world’s largest steel producer and consumer, has since 2021 capped crude steel production to curb carbon emissions and limit supply growth. The government has said it will continue to manage production this year, but specific details have not yet been released.
Chinese steelmakers have struggled with profitability since the second half of 2022, driven by a prolonged downturn in the property sector and further weakening demand. Zou Jixin, Baosteel’s chairman, said construction demand continues to decline, while infrastructure investment is expected to slow.
Baosteel, a subsidiary of state-owned China Baowu Steel Group, reported earnings of about 4.55 billion yuan (USD 639 million) in the first half of 2024; This reflects a slight decline of 0.17% from the same period in 2023. Zou noted that voluntary production cuts among steelmakers could reduce profitability across the industry. He called for more effective policies to reduce oversupply.
China’s crude steel output fell for a second consecutive month in July as many steelmakers conducted maintenance work due to worsening margins. According to market sources, only 1% of Chinese steelmakers are currently profitable.
Beijing suspended its steel capacity replacement program on Aug. 23 to limit capacity expansion. In the face of weakening domestic demand, Chinese steelmakers have increased exports, with total exports from January to July rising 21.8% y-o-y to 61.23 million tons. Baosteel aims to export 6 million tons of steel products in 2024 and plans to increase this figure to more than 10 million tons by 2028.
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