Chinese steelmakers face new pressure amid rising raw material costs

Chinese steel mills are facing new pressure amid rising raw material costs. This factor threatens to reduce profits after a strong third quarter, according to Bloomberg.

Overall industry profitability improved in July-September. However, analysts warn that the recovery may stall due to the impact on raw material price margins. Iron ore futures in Singapore have risen for the fourth consecutive month, while coking coal in Dalian has reached its highest level in nearly a year.

Qin Cui, president of the China Iron and Steel Research Institute, said at a recent conference that Chinese mills’ profits have begun to decline again. Manufacturers using electric arc furnaces are still operating at a loss. At the same time, spot margins for mills producing rebar, hot-rolled coil, and billets have fallen to almost zero.

In his opinion, foreign demand will be more important than domestic recovery in the coming months.

According to the latest survey of purchasing managers, the decline in industrial activity in China deepened in October. Steel prices rose compared to the previous month, reflecting the traditional peak construction season in the country. However, industry indicators continued to decline.

China’s largest steel producer, Baosteel, reported high profits for the third quarter. Hesteel’s profits for the period rose 45% year-on-year, while Maanshan Iron & Steel posted its best results in nearly two years in July-September. At the same time, Angang Steel, China’s second-largest steel producer, deepened its losses compared to the second quarter.

These discrepancies in performance, the agency notes, highlight the uneven recovery of China’s steel sector. The government insists on limiting excess production in the industry, but is likely to rely on capacity control rather than direct output cuts.

It should be recalled that Chinese metallurgical companies reduced steel production by 4.6% in September 2025 compared to September 2024, to 73.49 million tons. Compared to the previous month, the figure fell by 5%.

This is the fourth consecutive decline in monthly smelting volume, resulting in steel production for January-September of this year falling to 746.25 million tons (-2.9% y/y). This was due to both the holiday season and limited market demand.

Courtesy : https://gmk.center/