Orders for hot-rolled coils, the production of which was one of the main sources of income, ceased to appear with the usual stability. For the first time in 28 years, China has seen a decline in economic performance in 2018.
Declining demand for hot rolled steel coils was the second reason for the economic downturn after the trade war with the United States.
Therefore, the government of this country is concerned about the problem of staff reductions in enterprises.
Managers at a steel plant in Hebei, China's largest steelmaking center, say they are ready to lay off 10% of their workforce.
Over the past three months, the total profit of tonnes of steel production has decreased by 60%. Chinese steel mills face cost cuts and the loss of equipment and technology upgrades.
In 2018, the profitability of Chinese steel mills rose to $ 164.37 per tonne of metal, giving them an impetus to increase capacity. But the subsequent decline in car sales led to a demand from the automotive industry for only 30% of the country's rolled product.
Mr. Li Xinchuan, President of the China Institute for Planning and Research of the Metallurgical Industry, said that this year there will be an oversupply in the hot-rolled steel market. He also noted that businesses that previously used HRC are leaving China.
