Posted on 31 Jul 2023
The member mills of China Iron and Steel Association (CISA) experienced a significant downturn in their combined profits during the first half of this year, according to Tan Chengxu, CISA's chairman and head of Ansteel Iron & Steel Group, with their profits plunging by 68.8% on year to reach approximately Yuan 33 billion ($4.6 billion) in total.
"China's steel industry has entered a deep adjustment period, and steelmakers are facing great challenges in production and business operations due to the global economic downturn and the decline in domestic steel demand," Tan told local media China Metallurgical News on Thursday.
"The domestic property market plays a large role in driving finished steel demand, and in the first half of this year the main indicators continued to trend downwards," he pointed out.
For the first six months, investment in the domestic property sector slid by 7.9% on year to Yuan 5.9 trillion, while the total area of newly-launched property projects decreased by 24.3% on year to 498.8 million sq m during the same period, as reported.
Meanwhile, CISA's member mills posted a 5.6% on-year drop in their operating revenue to reach Yuan 3.19 trillion in the six months to end-June, according to Tan.
Summarizing the overall operating situation of the Chinese steel industry for the first half of this year, Tan observed that steel production exceeded demand, that steel prices fell on year, and that the mills suffered a significant retreat in profits and widening losses.
As of June 30, China's national price of HRB400E 20mm dia rebar, a bellwether of the country's steel-market dynamics, was assessed by Mysteel at Yuan 3,855/t including the 13% VAT, representing a marked decline of Yuan 532/t compared to the same period one year earlier.
For the second half of this year, Tan expects domestic steel demand to gradually improve, though profits may hover low for the sector. He also suggested there might be a moderate reduction in steel production and some space for steel prices to rebound. Furthermore, flat steel products are likely to perform better than long steel products during this period, Tan predicted.
Source:Mysteel Global
