China’s steel industry risks ‘falling off a cliff’ as overcapacity concerns point to end of an era
- China’s steel production has increased, but a property market downturn and slowdown in infrastructure spending have seen prices plunge steeply
- Washington has called for higher tariffs on Chinese steel imports, while Chile has made moves to curb shipments, and Vietnam is considering a probe
A pivotal transition within China’s steel industry, which is exacerbating overcapacity concerns, has led to uneasiness within the sector that a lack of discipline could risk it “falling off a cliff” and hurting the nation’s long-term foothold in global trade.
China’s steel production has increased rapidly over the past few decades, making it the world’s leading producer and exporter.
But the prolonged downturn in the property market and a slowdown in infrastructure spending by some local governments to curb debt risks means the industry is facing a reality check.
Prices have plunged steeply since 2021, and some steelmakers have called for output curbs, citing mounting losses and cash flow risks from overcapacity.
In the future, it will be driven by consumption and innovation-based strategic emerging industries and future industries
“In the past, [the steel industry] was mainly supported by investments such as real estate, infrastructure construction, and factory equipment renovation,” Tang Zujun, vice-president of the China Iron and Steel Association, said during a meeting with the country’s largest steelmakers at the end of April.