Low-level repetitive competition and vicious price wars will be warned by the industry association.
"To rectify the 'involutionary' vicious competition in the current steel industry, the China Iron and Steel Association (hereinafter referred to as 'CISA') will soon remind six enterprises whose cash flow from their main steel business was negative in 2024 and the first quarter of 2025, but whose crude steel production still increased." Recently, Jiang Wei, Secretary General of CISA, said at the information release conference of CISA in the first quarter: "Preventing vicious competition should become an industry standard jointly observed by all steel enterprises."
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Strengthening Industry Self-discipline
Currently, the Chinese steel industry is in a critical period of transformation and upgrading, a crucial period of green and low-carbon development, and an important window period for reshaping the international competition pattern.
Jiang Wei appealed: "The industry should maintain its determination, pool consensus, actively respond to risks and challenges, concentrate on doing its own work, and use the certainty of economic benefit growth and high-quality development to deal with the uncertainties of the external environment, promoting the industry's operation to make steady progress and continue to improve."
It is understood that on April 2, the General Offices of the Central Committee of the Communist Party of China and the State Council jointly issued the "Several Opinions on Improving the Price Mechanism Reform", clearly proposing specific measures to rectify "involutionary" vicious competition.
Among them, Article 12 clearly stipulates that comprehensive measures such as announcements, guidelines, reminders, administrative guidance, and cost investigations should be used to promote business entities to operate in accordance with the law and prevent vicious competition at prices lower than costs. Article 14 proposes that industry associations should establish a price supervisor system; Article 16 emphasizes strengthening cost supervision and investigation, and exploring the establishment of a benchmark cost and cost reporting system for important industries. In addition, the document emphasizes that we must adhere to the overall leadership of the Party, implement the Party's leadership throughout the entire process of price governance work, and report major matters to the Central Committee of the Communist Party of China and the State Council in a timely manner.
Relevant personnel from the National Development and Reform Commission said that they will further comprehensively use measures such as announcements, guidelines, and reminders to promote business entities to operate in accordance with the law, explore the formulation of clear price behavior rules, strengthen the coordination of enterprise self-discipline, social supervision, and government supervision, and improve the diversified governance model.
Jiang Wei said: "Combined with the spirit of the document, CISA will remind the six enterprises whose cash flow from their main steel business was negative in 2024 and the first quarter of 2025 but whose crude steel production still increased." At the same time, he emphasized that the entire industry, including electric arc furnace steel enterprises, should fully recognize the severe situation of declining domestic demand and shrinking international trade, further strengthen self-discipline, and steadily promote key tasks such as "stabilizing operation, preventing risks, improving quality, optimizing the structure, promoting transformation, and increasing efficiency."
Intensifying Industry Competition
In the first quarter of 2025, the pattern of oversupply in the steel industry became more obvious.
Data from CISA shows that from January to March 2025, China's crude steel output reached 259.33 million tons, an increase of 1.55 million tons year-on-year, with an increase rate of 0.6%; while the apparent consumption during the same period was 230.30 million tons, a year-on-year decrease of 2.86 million tons, with a decrease rate of 1.2%.
Jiang Wei pointed out: "Since March, the rapid growth of steel supply and the decline in demand have broken the originally fragile dynamic balance between supply and demand, leading to a continuous decline in steel prices. The situation of oversupply in the market has not improved, and industry self-discipline urgently needs to be strengthened."
In terms of steel exports, affected by the trade uncertainties brought about by the US tariff policy, there has been an obvious phenomenon of "rushing to export" among domestic enterprises. In March, China's steel exports exceeded 10 million tons again, reaching 10.456 million tons, an increase of 5.7% year-on-year, reaching the fifth highest level in history. Data from the General Administration of Customs shows that from January to March this year, the cumulative steel exports were 27.429 million tons, an increase of 6.3% year-on-year, performing better than the same period last year.
Jiang Wei analyzed: "The sharp increase in export volume is mainly due to the concerns of domestic exporters and foreign customers about the uncertainties brought about by international trade relief measures and the US tariff policy later this year. Therefore, they have all advanced their exports during the window period."
