In October, the domestic steel market faced a multitude of challenges, with various factors impacting its overall performance. Despite the continued recovery of the domestic economy and the effectiveness of early policy implementation, the steel industry witnessed resistance due to the ineffectiveness of steel mill production reductions, lower than expected downstream demand, and the resilience of raw material costs. However, amidst these headwinds, periodic rebounds were observed. As a result, steel mills experienced significant profit shrinkage, mainly attributed to intermittent shock rebounds in steel prices and rising raw material costs.
Analyzing the data on national crude steel production and profit per ton of steel, it is evident that domestic steel production enterprises are currently operating on slim profit margins. While comprehensive costs have shown a slow decline, steel companies are grappling with profitability issues due to intermittent price rebounds and the relative resilience of raw material prices. This creates a suppressed situation for steel companies, highlighting a clear structural contradiction between cost reduction and efficiency increase, juxtaposed against demand.
Supply and demand imbalances continue to persist in the steel industry this year. The supply side has performed relatively well, while the domestic demand side exhibits evident structural differences. However, the situation has been slightly alleviated by strong direct exports of steel, which have contributed to balancing the relatively unbalanced supply and demand relationship. Consequently, the domestic steel industry now demonstrates a pattern of “high cost, strong supply, strong external demand, weak domestic demand, and low efficiency.”
Looking ahead, domestic steel companies face a series of challenges under the guidance of the dual-carbon strategy. These include achieving high-quality development, fierce cost competition, meeting structural demands, and navigating the low-carbon transformation period. Simultaneously, there will be a need for supply reduction and managing fluctuations in demand. In order to overcome these hurdles, steel production enterprises must adapt to the paradigm of “new challenges, new markets, and new opportunities.”
The steel industry is at a critical juncture, where adapting to changing market dynamics and meeting environmental obligations are vital. It is essential for steel companies to focus on enhancing efficiency and reducing costs, all while aligning their operations with the dual-carbon strategy. R&D investments in innovative processes, technologies, and low-carbon practices can pave the way for sustainable growth and increased competitiveness.
Moreover, identifying and capitalizing on emerging markets will be crucial for steel companies. As globalization continues to shape the industry, opportunities lie in international markets that exhibit robust demand for steel products. Strengthening export capabilities and exploring new partnerships will enable domestic steel companies to diversify their customer base and mitigate the impact of domestic demand fluctuations.
In conclusion, the domestic steel industry faced a challenging month in October, marked by resistance and intermittent rebounds. While profitability remains suppressed due to the structural contradictions between cost reduction and efficiency increase, there are opportunities on the horizon. Adapting to the dual-carbon strategy, optimizing operations, and exploring new markets will be key to fostering growth and resilience in the domestic steel market. The industry must navigate this phase of transformation and emerge as a global leader in sustainable steel production.
Post time: Nov-28-2023