Tang Zujun, Vice President of the China Iron and Steel Industry Association, emphasized the need to promote balance between supply and demand at the Steel Enterprises Exchange Symposium held last month. According to Zujun, China's steel industry is facing a critical "fall" moment, and measures must be taken to prevent this situation.
Steel prices have continued to decline since 2021, and some Chinese steel companies have called for production limitations due to concerns that excess capacity will increase losses and cash flow risks. According to data from the China Iron and Steel Industry Association, profits of China's leading steel companies decreased by 47.91% in the first quarter of this year.
Zujun stated at the meeting that the Chinese steel sector should now shift its focus from investments in the renewal of real estate, infrastructure, and factory equipment to consumption and innovation-driven industries. He stated, "The era of massive construction in our country is over," outlining a vision for the sector's future.
However, Zujun also warned that excessive investment in certain products could worsen overcapacity, and if the supply-demand balance is not managed well, it could have a significant impact on the sector's ecosystem, sustainable development, and international competitiveness.
Nevertheless, analysts suggest that a significant reduction in China's steel overcapacity in the coming months is unlikely. This is because China's steel products are still heavily used in sectors such as real estate and infrastructure, with rapid demand growth not expected in these areas.
In conclusion, China's steel industry is at a significant turning point, and the sector's future seems to depend on its ability to achieve supply-demand balance and strategically navigate forward.
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