China's steel sector is reportedly struggling with overcapacity and weakening demand.
Baoshan Iron & Steel (Baosteel), China’s largest listed steelmaker, has indicated the likelihood of a nationwide reduction in steel output this year, reported Reuters.
The company, a subsidiary of China Baowu Steel Group, is reportedly the world’s top steel producer.
Baosteel noted that the steel industry in China is facing external pressures while already struggling with overcapacity and weakening demand.
Baosteel deputy general manager Cai Yanbo said during the company’s first-quarter results briefing: “Chances for a cut are high as it has been mentioned in the government report,” when addressing market speculation about a potential 50 million tonne cut in Chinese crude steel production for the year.
However, Yanbo expressed that immediate cuts were not anticipated, stating: “We have appealed to relevant authorities to avoid [a] one-size-fits-all approach while controlling output.”
An output reduction could help to rebalance the steel market, potentially supporting steel prices and influencing the cost of steelmaking materials.
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Although there are announced plans in the country to restructure the steel sector through output cuts, specifics regarding the timing and extent of these reductions remain unclear.
Baosteel’s chair Zou Jinxin provided insights into the future of China’s steel exports, predicting a decline of approximately 15 million tonnes in 2025 due to tariff increases.
Jinxin also noted that indirect steel exports, which include manufactured goods such as containers and vehicles, would decrease by 20 million tonnes. He anticipates additional stimulus measures from the government to mitigate the external economic challenges.
Jinxin also mentioned a projected 2% drop in domestic steel consumption for 2025.
In 2024, China’s steel exports reached a nine-year peak of 110.72 million tonnes. Baosteel itself achieved a record 6.07 million tonnes in exports last year, although the company has not disclosed its export target for 2025.
Despite these challenges, Baosteel reported a 26.4% annual rise in net profit for this year’s first quarter, benefiting from reduced costs.
Last month, Marula Mining’s subsidiary Muchai Mining Kenya entered a contract with Baosteel Resources South Africa for the purchase and sale of manganese ore from the Kilifi manganese processing plant in Kenya.
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