The collapse of China’s real estate sector, which accounts for 1/3 of steel demand, has severely damaged the operation of Chinese steel companies.

Liberty Times reported that as high as 80-90% of the steel companies in China are suffering losses.

These are the findings from a survey conducted by the research agency “My Steel Network” with 247 steel mills.

The survey found that the profit margin of these companies is only 9.96%.

China Baowu Steel Group, the world’s largest steel company, made a profit in the first half of this year, but its earnings halved from the same period last year.

Chen Derong, chairman of Baowu, said bluntly that the group needs to prepare for a “long-term winter.”

The Economic Observer disclosed on September 4th that China’s steel market is facing problems with both supply and demand. As of September 1st, 37 listed steel companies have released semi-annual reports. They show that only five companies saw profits increase year-on-year, and 32 companies have demonstrated negative profit growth, of which five suffered losses.

According to the China Iron and Steel Association statistics, the total profit of its member companies in the first seven months was $13.5 billion (93.6 billion yuan), plunging 63.4% year-on-year.

Thirty-four member companies made losses in the first seven months, with accumulated losses soaring to $2.57 billion. Especially in July, 63 of 90 member companies lost money.

In the first seven months of 2022, steel output dropped 3.4% from last year.

He Wenbo is the executive chairman of the China Iron and Steel Association. He 

pointed out that China’s urbanization and industrialization are becoming mature, and the gradual decline of total steel demand is inevitable.

Several people in the steel industry have different ideas. They said that the main issue for China’s steel industry is the weakness of the housing construction sector.

China’s struggling real estate developers have been in trouble due to the crises of unfinished residential projects and debt defaults.

In addition, China’s steel industry has been facing a challenging environment as the economy is full of uncertainty. The Covid pandemic, the government’s Zero-Covid control measures, and the increasingly severe global economic recession are weighing on China’s economic growth forecasts and the steel demand.

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