In the first half of this year, the nation’s crude steel production reached 536 million tons, up 1.3% year-on-year; steel product output totaled 677 million tons, an increase of 4.4% over the same period last year; and steel exports amounted to 43.58 million tons, representing a year-on-year growth of 31.3%. At the same time, the profitability of steel enterprises declined significantly year-on-year, but financial and capital risks remain manageable.

　　Tan Chengxu, President of the China Iron and Steel Association, stated that in the face of numerous “growing pains” associated with transformation and upgrading, as well as an increasingly challenging market environment, the steel industry remains committed to the general guiding principle of pursuing progress while maintaining stability. It is striving to ensure overall stability in production and operations, continuously enhancing its core competitiveness and strengthening its core capabilities, and driving new breakthroughs in high-end, green, and intelligent development.

　　Exports surged significantly.

　　Since the beginning of this year, China's steel exports have shown strong momentum. In the first half of the year, steel exports reached 43.58 million tons, an increase of 31.3% year-on-year; steel billet exports totaled 1.67 million tons, up 112.6% year-on-year. Meanwhile, steel imports amounted to 3.74 million tons, down 35.2% year-on-year, and steel billet imports reached 1.18 million tons, a decrease of 68.5% year-on-year. The net export of crude steel totaled 42.11 million tons, representing a year-on-year increase of 64.3%.

　　“China’s steel industry has further enhanced its international market competitiveness, with a significant increase in exports of high-value-added products. The share of plate exports has reached 66%, hitting a new historical high,” said Jiang Wei, Deputy Secretary of the Party Committee and Vice President and Secretary-General of the China Iron and Steel Association.

　　Magang Jia Cai is a national-level demonstration enterprise recognized as a single-product champion in manufacturing, with its wheel and axle products holding a global market share exceeding 10%. In the first half of the year, Magang Jia Cai achieved 110.5% of its annual revenue target, representing a year-on-year increase of 14.4%; export sales revenue rose by 34.9% year-on-year; and new contracts signed increased by 22.6% year-on-year.

　　TianGong International is a key national high-tech enterprise, and its high-speed tool steel products have been recognized as national-level single-product champions. The company continues to strengthen its competitive edge in high-end, high-value-added products, with exports accounting for nearly half of its total sales. “In June of this year, TianGong International’s export value exceeded 40 million U.S. dollars, once again setting a new record for monthly export performance,” said Wu Suojun, General Manager of TianGong International. Recently, a 7,000-ton rapid forging project was officially put into operation, marking an important milestone for TianGong International as it enters the integrated large-scale die-casting sector. The company will further diversify and meet the market’s demand for high-end products, continuously enhancing its competitiveness and driving sustainable development.

　　It is worth noting that steel exports have generally shown a trend of increasing volume but declining prices. In the first half of the year, the average export price of steel was US$1,075 per ton, down 24.7% year-on-year. A relevant official from the China Iron and Steel Association cautioned that while steel exports surged in the first half of the year, alleviating supply-demand pressures in the domestic market, the slowing global economic growth and rising protectionism could trigger a resurgence in trade disputes, a development that deserves close attention from the industry. Taking into account previous order bookings and the impact of the RMB’s depreciation, it is expected that the growth rate of steel exports in the second half of the year will narrow.

　　Ensure smooth operation

　　China is the world’s largest producer and consumer of steel, with steel production primarily geared toward meeting domestic demand. In the first half of the year, due to steel supply outpacing demand, steel prices fell more sharply than costs declined, leading to a noticeable drop in the overall profitability of the steel industry.

　　According to data from the China Iron and Steel Association, in the first half of the year, the operating revenue of key statistical member steel enterprises totaled 3.19 trillion yuan, down 5.56% year-on-year. Operating costs fell by 3.06% year-on-year, with the decline in revenue exceeding the decline in costs by 2.5 percentage points. Total profits amounted to 33 billion yuan, a year-on-year decrease of 68.8%. The average sales profit margin was 1.03%, down 2.1 percentage points year-on-year. The proportion of loss-making enterprises reached 44.6%, an increase of 17.4 percentage points compared to the same period last year.

　　Faced with the current situation of phased supply-demand imbalances in the market, leading steel enterprises are adhering to production based on sales, efficiency, and cash flow. At the same time, they are deeply promoting management reforms and actively engaging in benchmarking and tapping into hidden potential. Steel companies such as Shagang, Shansteel, and Panzhihua Xichang Steel have launched a “combined approach” to reduce costs and boost efficiency, focusing on key areas to break through bottlenecks and continuously drive improvements in performance indicators and cost reductions.

　　“We are working closely with relevant departments to accelerate the development of a work plan aimed at stabilizing growth in the steel industry. We will exert efforts on both the supply and demand sides, focusing on ensuring stable operations, expanding demand, promoting reform, supporting enterprises, and strengthening momentum,” said Zhang Haideng, Deputy Director-General of the Raw Materials Industry Department of the Ministry of Industry and Information Technology, at the recently held 6th Session, 6th Meeting of the Board of Directors (Expanded) of the China Iron and Steel Association.

　　To ensure the stable operation of the steel industry, a multi-pronged approach is needed. Tan Chengxu stated that, based on a thorough assessment and survey of production capacity, we should explore and establish a new mechanism for capacity governance that is tailored to the new development environment—incorporating both energy consumption and carbon emission policy constraints as well as industry self-regulation and government oversight—and that aligns with market principles. We must accelerate the implementation of this mechanism. We should actively integrate into the construction of a nationwide unified market, support leading enterprises as key implementers, adopt comprehensive measures to promote restructuring, and enhance industrial concentration. In addition, we must strengthen industry self-regulation.

　　China’s iron ore resources are highly dependent on imports, and the sources of these imports are concentrated. As a result, iron ore prices have continued to fluctuate at high levels, severely eroding profits in China’s steel industry. Regarding the effective development and construction of key domestic iron ore projects, Huo Fupeng, Deputy Director-General of the Industrial Department of the National Development and Reform Commission, proposed that while ensuring the normal production of existing mines, we should accelerate the commencement of new projects. In particular, for large-scale iron concentrate projects such as the Datagou Iron Mine and the Hongge South Mine—each with an annual output capacity of tens of millions of tons—we must focus on effectively implementing key tasks including mineral rights approval, transfer of mining rights, land use, and energy consumption quotas.

　　Accelerate low-carbon development

　　As China’s economy shifts from a phase of high-speed growth to one of high-quality development, steel demand has entered a peak plateau. It is now an inevitable trend for the steel industry to reduce output while improving quality.

　　Looking solely at consumption patterns, steel usage in the construction industry declined from 58% in 2020 to 53% in 2022, while steel usage in the manufacturing sector rose from 42% to 47%. Steel demand for automobiles, home appliances, ships, wind power, and photovoltaics continued to grow, effectively supporting the increase in both the variety and quantity of steel used in manufacturing.

　　As the steel market moves toward a higher level of supply-demand equilibrium, corporate trends are becoming increasingly divergent, and efforts to transform business models and adjust industrial structures are accelerating. Since the beginning of this year, Shougang Zhixin Electromagnetic has completed construction and put into operation the world’s first dedicated production line for 100% thin-gauge, high-magnetic-permeability grain-oriented electrical steel. Two grain-oriented electrical steel products have made their global debut on this line. Relying on strong market competitiveness, in the first half of the year, Shougang’s output and sales of electrical steel reached 54.4% and 52.2% respectively of the annual budget targets. Production of non-oriented high-grade steel, new-energy products, and grain-oriented electrical steel increased year-on-year by 14%, 59%, and 39%, respectively.

　　In the first half of the year, Ansteel achieved a global debut by producing 33-mm-thick X80-grade high-strain pipeline steel plates. Xinsteel successfully rolled the world’s thinnest high-grade non-oriented electrical steel. And Shagang’s ultra-large-welding-heat-input, high-end shipbuilding steel products filled a domestic gap... These technological innovations have yielded remarkable results, continuously strengthening China’s steel industry’s core competitiveness.

　　Green and low-carbon development is an intrinsic requirement for the high-quality development of the steel industry. Despite downward economic pressures, the steel industry has steadily advanced its ultra-low emission upgrades, continuously improving its environmental protection standards. As of the end of June, a total of 87 steel enterprises had completed ultra-low emission upgrades and undergone assessment and monitoring. Among these, 62 enterprises have completed ultra-low emission upgrades across all production processes, covering crude steel capacity of approximately 314 million tons; another 25 enterprises have completed ultra-low emission upgrades for selected production processes, involving crude steel capacity of about 114 million tons. The per-ton steel energy consumption and pollutant emissions in the steel industry continue to decline.

　　On May 17 of this year, the European Union’s Carbon Border Adjustment Mechanism (CBAM)—commonly known as the carbon tariff—officially came into effect, marking the entry of international carbon pricing mechanisms into the implementation phase. “In the short term, this will have limited impact on China’s steel exports; however, in the long term, its impact will intensify,” analyzed Fan Tiejun, Director of the Metallurgical Industry Planning and Research Institute. As the EU continues to advance its ambitious emissions reduction policies, gradually phase out free allowances, and expand the scope of CBAM coverage, the carbon price differential will widen, leading to higher export costs for China’s steel products destined for Europe. Coupled with the possibility that other developed countries may also introduce similar trade barriers akin to CBAM, the impact on China’s steel industry will become even more widespread. Moreover, downstream industries such as the automotive sector have already begun paying close attention to the carbon emissions associated with steel products. Steel producers serving the automotive industry, which predominantly rely on the long-process production method, now face significant challenges.

　　Recently, China’s first ultra-low-emission, low-carbon automotive steel—produced using high-quality, high-proportion hydrogen-based direct-reduced iron (DRI) clean raw materials—has rolled off the production line at Tanggang Company of Hebei Iron and Steel Group and passed inspection. The company has now provided a data package to BMW Group in Germany, officially kicking off the material certification process. According to the cooperation memorandum signed by both parties, starting from mid-2023, BMW’s Shenyang production base will gradually begin using Hebei Iron and Steel’s low-carbon automotive steel for mass-produced models.

　　It is understood that HBIS has completed the world’s first 1.2-million-ton hydrogen-based metallurgy demonstration project, which reduces carbon emissions at the source and opens up a brand-new pathway for producing low-carbon materials needed by the automotive industry.

　　“Looking at development trends, downstream customers, when choosing steel products, not only pay attention to product quality but also to the green and low-carbon nature of the production processes,” said a relevant official from HBIS Group. The EU’s carbon tariff has created opportunities for HBIS Group to develop its green and low-carbon products in the European market, and the global market is vast.