Posted on 31 Jul 2025
China's steel industry maintained generally stable operations in the first half of 2025, with member mills of the China Iron and Steel Association (CISA) reporting a notable 63.3% on-year surge in total profits to Yuan 59.2 billion ($8.2 billion), according to CISA's chairman Zhao Mingge.
The share of loss-making steelmakers dropped significantly during H1, accounting for only around one-quarter of CISA member mills, compared with nearly half during January-June last year, he told China Metallurgical News (CMN), widely regarded as CISA's voice.
Zhao attributed the large increase in profitability to three key factors, namely the mills' self-discipline in curbing output, a sharp drop in raw material costs and strong steel exports performance.
During the six months, Chinese steelmakers made significant progress in curbing production through industry self-discipline measures, he said. As a result, China's crude steel output dropped 3% on year to 514.8 million tonnes during January-June, with June output alone shrinking 9.2% on year to 83.18 million tonnes, as Mysteel Global reported.
The drop in steel output helped drive down demand for raw materials such as iron ore and coking coal. As a result, prices for these key inputs fell significantly, outpacing the decline in finished steel prices. For instance, China imported 592.2 million tonnes of iron ore in H1, down 3% on year. The average import price was also $97.5/tonne, 17.7% lower on year, according to China Customs data.
Meanwhile, China's finished steel exports reached 58.15 million tonnes in H1, rising by 9.2% on year, a jump which helped to ease the domestic supply-demand imbalance, Zhao pointed out.
Looking ahead, Zhao said policies to control crude steel output will likely take effect during this half and should ease supply-demand pressures. Still, he cautioned that China's steel industry is entering a post-peak phase of structural adjustment, with both total and per capita apparent steel consumption trending lower.
China's steel demand from the real estate sector is projected to decline further, while infrastructure-related demand is expected to remain stable. Meanwhile, growth potential remains in the automotive, home appliance, shipbuilding and energy sectors, he believed
He also highlighted that demand for advanced steel products – both in volume and quality – for use in high-end manufacturing, 'green' and low-carbon technologies and emerging energy industries is rising. Materials used in marine engineering, aerospace, and nuclear power fields where technical barriers are higher offer further development opportunities.
Zhao told CMN that drawing from international experience, developed countries like the U.S., Germany, and Japan typically took around 10 years to reach a supply-demand balance after steel production peaked, with output eventually falling by 18-30%.
These nations implemented various policy tools such as offering subsidies, enforcing production controls, erecting trade protection, incentivizing M&A activity and promoting global expansion to help their steel industries gradually shift to a market-driven business model away from being government-led, he explained.
In China's case, considering the domestic demand forecasts and the lessons learned from abroad, Zhao predicted that the country's apparent steel consumption could drop to 800-850 million tonnes by 2030, a reduction of over 150 million tonnes compared with 2024. This marks a shift to a new phase where manufacturing becomes the dominant driver of steel demand, while construction plays a supporting role, he said.
Source:Mysteel Global
