According to an announcement made by four Chinese steel companies including Baosteel on January 16th, these four steel enterprises are expected to collectively incur losses totaling 5.302 billion yuan in 2024.
On the evening of January 15th, Baosteel’s subsidiary, Bayi Iron and Steel, released its performance announcement forecasting a net loss of around 1.732 billion yuan for 2024, with a non-GAAP net loss of approximately 1.784 billion yuan, indicating an expanded loss compared to the previous period.
Similarly, on the same day, Fujian-based steel leader Sansteel Minguang revealed its performance forecast for 2024, anticipating a net loss of 1.262 billion yuan, down 89.00% year-on-year. Their non-GAAP net loss is projected at 0.712 billion yuan, a decline of 270.87%.
On January 14th, Hangzhou Iron & Steel announced an expected net loss of around 0.630 billion yuan for 2024, with a non-GAAP net loss of about 0.830 billion yuan, marking a significant year-on-year decline.
Reports from the financial news outlet Times Financial on January 16th revealed that Chinese steel enterprises faced continued operational pressures in 2024, leading to a significant decline in profitability. In the A-share market, companies like Chongqing Iron & Steel, Anyang Iron & Steel, Benxi Iron & Steel Plate, Magang Group, Baotou Iron and Steel, Shougang Group, and Shandong Iron & Steel all reported losses in the first three quarters of 2024.
Data from the China Iron and Steel Industry Association indicated that in the first three quarters of 2024, the steel industry experienced a greater decline in revenue compared to cost reduction, resulting in a decrease in industry profitability. Key statistics show that cumulative operating income for steel enterprises was 4.54 trillion yuan, down 6.87% year-on-year; operating costs totaled 4.31 trillion yuan, showing a 6.14% decline, with revenue falling more than costs by 0.73 percentage points. Total profits for key steel enterprises reached 28.977 billion yuan, down 56.39% year-on-year, with an average profit margin of 0.64%, a decrease of 0.72 percentage points. As of the end of September, the debt-to-asset ratio for key steel enterprises stood at 62.91%, up 0.75 percentage points year-on-year.
The financial news outlet Sina reported that since August 2024, losses in Chinese steel factories have been increasing, with a sharp decline in factory profitability, difficulty in selling steel products, weakening demand, and many factories joining the maintenance queue. Up to 32 steel plants in China have announced production stoppages for maintenance, with some factories forced to halt operations due to bankruptcy, mainly caused by continuously falling steel prices.
Renowned mainland capital figure Xu Zhen told Epoch Times that the steel industry’s two major customers, the real estate and automotive industries, are both experiencing downturns, spelling disaster for the steel industry.
According to Times Financial, the Chinese steel industry continues to face challenges in terms of high output, high costs, high exports, low demand, low prices, and low profitability, creating a scenario of “three highs and three lows.”
Shanghai Steel Co. analyst Wu Jianhua stated that steel market prices currently hover around 3,300 yuan/ton to 3,500 yuan/ton, down approximately 600 yuan/ton from the same period last year. The industry’s expanding losses are primarily attributed to a significant decline in overall structural steel demand, driven by reduced demand for construction steel products in the real estate market.
Facing sluggish market demand and continuously declining profits, some steel companies have already declared bankruptcy.
In a notable case, Shaanxi Dongling Group, which was ranked 205th on the “Top 500 Chinese Enterprises” list as of September 20, 2023, filed for bankruptcy reorganization on July 25, 2024, with Shaanxi Libang Software Co., Ltd. The group’s 18,000 employees are now facing unemployment.