China has achieved a smooth transition to a post-COVID phase, with quick restoration to normal economic and social order in a relatively short span of time in 2023. However, the country’s steel sector faced several challenges, said an official of the China Iron and Steel Association (CISA) at a conference.
China’s steel industry during the first three quarters this year featured high production and high costs, with low prices and low profits, said Luo Tiejun, vice-chairman of the CISA.
During January-September, China‘s GDP grew by 5.2% year on year. Of this, the value added by the steel industry increased by 7.8%, which was 3.8 percentage points higher than the growth of industries above designated size. It ranked among the top in the industrial sector.
China’s crude steel production reached 795 million tonnes over the same period, a year-on-year increase of 1.7%. The apparent consumption of crude steel declined 1.5% on the year to 731 million tonnes.
Steel exports amounted to 66.82 million tonnes, up 31.8% from the year prior, while the net export of crude steel, calculated as a conversion, came in at 64 million tonnes, rising 63.3%.
“Most of the increased steel output has been exported in the first nine months, but steel prices have fallen by 12% year on year. Key member companies of the CISA have seen a 34.1% decrease in profits, with a profit margin of only 1.33%. Nearly 40% of companies are operating at a loss,” Luo said. He further added that losses may be even greater in October.
During the first three quarters, China‘s steel exports increased 16 million tonnes or 32% compared with the corresponding period in 2022. However, the average export price has been continuously dropping since the second half of last year, with September’s export price falling to $814/t, down 40% from the beginning of this year. At the same time, the profit margin of the steel industry was only 0.37%, ranking third from the bottom among the 41 major industries in the country.
Luo believes that stable growth in the steel industry should be profitable, sustainable, and of high quality, rather than simply focusing on quantity. Companies and local economies should balance the relationship between economic growth and high-quality development.
