Posted on 19 May 2025
Major member steel mills of the China Iron and Steel Association (CISA) posted a combined profit of Yuan 21.58 billion ($3 billion) for the January-March period, surging 108% year on year, despite a 6.6% decline in total revenue to Yuan 1.44 trillion, CISA reported at its latest quarterly briefing.
The strong earnings performance in the first quarter came against the backdrop of persistent oversupply and weak demand in China's steel sector.
According to CISA Vice Chairman Jiang Wei, member mills' improved profitability was largely attributed to controlled output levels and low inventories. He further explained that the prices of steelmaking raw materials declined more steeply than steel prices, providing additional support to mills' profit margins.
Over January-February, China's total crude steel output dropped 1.5% year on year to 166.3 million tonnes, data from the National Bureau of Statistics (NBS) showed.
Unlike previous years, when mills typically ramped up production early in the year, most CISA member steelmakers in this Q1 prioritized profitability over volume, demonstrating that self-imposed output discipline remains the most effective strategy for navigating the sector's structural challenges.
However, this momentum began to falter in March. A faster-than-expected increase in steel supply -- combined with weaker-than-anticipated demand during the traditionally strong March–April period -- weighed on the market, sending steel prices into a sustained downtrend, Jiang noted.
According to NBS data, China's crude steel output rose by 4.6% year on year in March to 92.8 million tonnes. Meanwhile, the spot price of rebar in Shanghai dropped by 5.4% between March 13 and April 22, falling to Yuan 3,160 per tonne including the 13% VAT, Jiang cited CISA data.
In light of these developments, CISA has reiterated its call for member mills to maintain output discipline and continue reducing inventories. The association emphasized that such efforts are not a short-term fix but a necessary foundation for the industry's long-term, sustainable development.
The association urged member mills to abandon the outdated model of pursuing production volume and engaging in price wars. Instead, mills should take the lead in optimizing their product mix and managing export volumes to consolidate the gains achieved in the first quarter.
Source:Mysteel Global
