Profitability in the Chinese steel industry began to recover in June 2025, and analysts estimate it could grow faster in the second half of the year if Beijing implements plans to reduce excess capacity. This is reported by Bloomberg.
According to the National Bureau of Statistics of China (NBS), in the first half of the year, revenues of ferrous metallurgy enterprises increased almost 14 times year–on-year, albeit due to a very low base in 2024. Profit support in June was provided by a reduction in supply and weaker prices for raw materials compared to finished products.
The steel industry has experienced difficult years due to the crisis in the Chinese real estate market, which has traditionally been the main driver of demand. Because of this, she found herself at the center of the government's antitrust campaign aimed at curbing excessive competition in various sectors of the economy.
Although specific capacity control mechanisms are still being developed, many plants have already reduced production: in the first half of the year, it reached its lowest level since 2020. This calls into question the need for further administrative restrictions.
Demand growth is also having a positive effect: according to Bloomberg Intelligence, domestic steel consumption in China increased by 4.3%, including due to the automotive and mechanical engineering industries. Although construction remains weak, exports continue to grow despite global trade barriers.
According to UBS forecasts, more than 60% of Chinese metallurgists have already turned a profit, which is twice as much as in July 2024. The large-scale construction of a hydroelectric power plant in Tibet may also have a beneficial effect.
However, a sharp rise in prices for raw materials, especially for coking coal, may again jeopardize the stability of profits.
