China's steel industry last year lost nearly 30 billion yuan
July 14 10:38:17, 2025
Abstract According to Sun Zhaohui, a member of the National Committee of the Chinese People's Political Consultative Conference and deputy director of the State Key Laboratory for the Comprehensive Utilization of Vanadium and Titanium Resources at Panzhihua Iron and Steel, the Chinese steel industry is facing severe challenges. He explained that overcapacity in domestic steel production, combined with high costs of imported iron ore, has significantly eroded the already slim profit margins of steel companies. As a result, the entire industry is operating on the edge of loss. In 2012 alone, the sector reported losses totaling 28.924 billion yuan, marking a staggering 7.39-fold increase compared to the previous year.
The situation is driven by multiple factors, including a slowdown in China’s economic growth, reduced demand from key industries such as construction and manufacturing, and declining steel prices. Sun Zhaohui emphasized that the market is plagued by a mismatch between supply and demand, with production capacity far exceeding actual needs. "It is estimated that crude steel production capacity will surpass 1 billion tons in 2013," he said, highlighting the urgent need for structural adjustments.
Another major issue is the soaring cost of imported iron ore, which has put immense pressure on steel companies. For example, while the steel price index rose by just 2.9% in October of the previous year, the price of imported iron ore surged by 15.9%. This imbalance has left many steel enterprises in financial distress, struggling with high borrowing costs and limited access to capital. According to data from the Iron and Steel Association, sales revenue for member companies dropped by 4.31% in 2012, while bank loans increased by 8.6%, and financial expenses rose by 24.29%.
In light of these challenges, Sun Zhaohui called for more effective policies to address overcapacity, improve efficiency, and stabilize the industry’s financial health. He stressed that without timely intervention, the long-term sustainability of China’s steel sector could be at risk.
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