China's steel industry last year lost nearly 30 billion yuan
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The losses are driven by several key factors. First, China’s economic growth has slowed down, leading to reduced demand for steel in various sectors. Additionally, downstream industries have experienced declining demand, which has put downward pressure on steel prices. Sun Zhaohui highlighted that the steel market is suffering from a contradiction between oversupply and weak demand, with domestic steel production capacity far exceeding actual needs. It is estimated that crude steel production capacity in China could surpass 1 billion tons in 2013.
Another major challenge is the high cost of imported iron ore, which has significantly eroded the profitability of steel companies. For example, in October of the previous year, while the steel price index rose only by 2.9%, the import price of iron ore surged by 15.9%. This imbalance has left many steel enterprises in financial distress, struggling with limited access to funding and high borrowing costs. According to data from the Iron and Steel Association, in 2012, sales revenue for member companies dropped by 4.31%, bank loans increased by 8.6%, and financial expenses climbed by 24.29%.
With these challenges, the steel industry is under immense pressure to adapt, innovate, and find sustainable solutions to restore profitability and stability. Sun Zhaohui emphasized the need for stricter regulation, improved efficiency, and better resource management to address the current crisis and ensure long-term development.