Hou Angui, general manager and deputy secretary of the party committee of Baowu Group, the leading Chinese steelmaker, has stated that China’s steel industry is facing a tougher situation than in 2008 and 2015. During Baowu's 2024 semi-annual work conference, he urged the group’s financial department to pay attention to the security of the corporate financial chain. He asked the group to make a longer-term capital balancing plan as cash is more important than profit in the process of traversing “a long and harsh industry winter”.
The struggles of the Chinese steel market have deepened this year more than expected, according to Baowu. The main factor is worsening steel demand, with the deeper crisis of the real estate market. Apparent steel consumption in China declined by 3.3 percent in the first half of 2024, while production declined by just 1.1 percent. Weakening local demand already resulted in steel exports increasing by 24 percent in the first half. Early this year, market sources expected some mild increase in overall overseas shipments to near 100 million mt, versus 90 million mt last year. But now expectations have changed and market sources do not exclude exports reaching 120 million mt.
“Finally, someone dares to say what everybody has known for a long time, in a market where physical demand has decreased for several years already, while global overcapacity is exceeding 600 million mt and, regardless, almost all countries are announcing additional capacity expansions for the coming years,” a source in Europe commented.
To fight the severe market conditions, Baowu stated that it will accelerate the establishment of a market-oriented operation mechanism, keep reducing costs and improving efficiency, while it will also focus on the relationship between technical indicators and economic efficiency.