The steel industry is a vital foundational industry in China. Data from the National Bureau of Statistics shows that in the first quarter of this year, the total profit of the ferrous metal smelting and rolling processing industry reached 7.51 billion yuan, turning from a loss to a profit year-on-year. Looking at leading indicators for the industry, the PMI for the steel industry released in April by the Steel Logistics Professional Committee of the China Federation of Logistics and Purchasing stood at 50.6%, rising for three consecutive months on a month-on-month basis.
"Since the beginning of this year, China's overall economic performance has remained stable, providing a favorable environment for the steady operation of the steel industry," said Jiang Wei, Deputy Secretary of the Party Committee, Vice President, and Secretary-General of the China Iron and Steel Association. The basic stability of production and operations in the steel industry during the first quarter benefited from effective production control by enterprises in January and February, with year-on-year improvements in efficiency laying a solid foundation for positive development throughout the year.
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Improved profitability
Recently, listed companies in the steel industry have successively released their first-quarter reports. Baowu Steel achieved a net profit attributable to shareholders of 2.434 billion yuan in the first quarter, a year-on-year increase of 26.4%; CITIC Special Steel recorded a net profit attributable to shareholders of 1.384 billion yuan, up 1.76% year-on-year; Nanjing Iron and Steel saw a net profit attributable to shareholders of 578 million yuan, a 4.42% year-on-year increase; and Valin Steel achieved a net profit attributable to shareholders of 562 million yuan, surging 43.55% year-on-year.
"Currently, the steel industry is operating generally stably and has entered a new stage of development focused on quantity reduction and quality improvement," said Tao Qing, Director of the Operation Monitoring and Coordination Bureau of the Ministry of Industry and Information Technology. Enterprise efficiency has gradually improved, with the operating costs of key steel enterprises decreasing by 9.6% year-on-year in the first quarter, and the average profit margin on sales of steel products increasing by 0.67 percentage points year-on-year. The structure of steel products has continued to optimize: the output of construction steel rebars was 48.11 million tons, a 2.9% year-on-year decline; the output of special thick plates, medium plates, coated plates, and plated plates used in manufacturing all increased by over 10% year-on-year, totaling 38.84 million tons; and crude steel output remained basically stable, with national crude steel output reaching 259 million tons, a slight 0.6% year-on-year increase.
A report on the steel industry's operations recently released by the China Iron and Steel Association also shows that in the first quarter, the total profit of key member steel enterprises reached 21.583 billion yuan, a year-on-year increase of 108%; the average profit rate was 1.5%, up 0.82 percentage points year-on-year.
It is understood that steel prices showed a slightly downward trend with fluctuations in the first quarter, while the year-on-year decline in raw material and fuel prices—particularly fuels—was greater than that of steel prices. Data shows that the procurement cost of imported iron ore powder for key steel enterprises decreased by 19.26% year-on-year, domestic iron concentrate by 17.59%, coking coal by 33.32%, metallurgical coke by 30.26%, pulverized coal injection by 13.35%, and scrap steel by 15.88%.
Sustained progress in pollution and carbon emission reduction
The steel industry is a key sector for green development, with continuous advancements in pollution and carbon emission reduction. As of April 20, a total of 189 steel enterprises (including one pellet enterprise) had completed or partially completed ultra-low emission transformation and evaluation monitoring. Among them, 141 enterprises fully completed ultra-low emission transformations, involving approximately 591 million tons of crude steel production capacity; 47 enterprises partially completed transformations, covering about 169 million tons of capacity.
Jiang Wei noted that the implementation of ultra-low emission transformation and extreme energy efficiency projects has helped China build the world's largest clean steel production system, continuously improving steel enterprises' environmental performance. In the first quarter, the comprehensive energy consumption per ton of steel for key statistical steel enterprises was 543 kg of standard coal, a 0.52% year-on-year decrease; comparable energy consumption per ton of steel was 480 kg of standard coal, down 2.1% year-on-year; water intake per ton of steel decreased by 0.90% year-on-year; and emissions of pollutants such as chemical oxygen demand, ammonia nitrogen, and suspended solids in discharged wastewater fell by 10.07%, 10.84%, and 14.82% year-on-year, respectively. Sulfur dioxide, particulate matter, and nitrogen oxide emissions per ton of steel decreased by 11.68%, 3.27%, and 12.78% year-on-year, respectively.
In March, the Ministry of Ecology and Environment issued the *Work Plan for Including the Steel, Cement, and Aluminum Smelting Industries in the National Carbon Emissions Trading Market*, officially incorporating these three industries into the national carbon market. This marks the first expansion of the carbon market since the power industry was initially included in 2021.
Feng Chao, Deputy Secretary-General and Director of the Science, Technology, and Environmental Protection Department of the China Iron and Steel Association, stated that this expansion fully considers the steel industry's current status and the complexity of calculating carbon trading inclusion for the sector. By evolving carbon quota allocation from "quantity-based" to "quality-improving and quantity-controlling," it avoids short-term shocks to the industry while reserving a transformation window for technological upgrades.
Seeking progress while maintaining stability to enhance quality and efficiency
Currently, the steel industry is in a period of deep adjustment, facing challenges such as supply exceeding demand and a severe export situation. Sustaining steady and positive industry operations still requires strenuous efforts.
"Since March, steel supply has grown rapidly, breaking the hard-won and fragile dynamic balance of market supply and demand. Steel prices have continued to decline, and the oversupply situation has not changed, necessitating stronger industry self-discipline," Jiang Wei warned.
Pan Fujie, Director of the Steel Logistics Professional Committee of the China Federation of Logistics and Purchasing, noted that in April, the steel industry exhibited characteristics of recovering demand, accelerating supply, and price pressure. The steel PMI returned to the expansion range after a four-month hiatus, with both production activities and steel mills' order intake recovering—reflecting the gradual effectiveness of policy measures. Going forward, attention should be paid to the constraints of excessive production on price elasticity and the impact of changing foreign trade environments on demand; the sustainability of the industry's recovery remains to be observed.
The industry generally acknowledges that the significant improvement in steel enterprises' overall operations in the first quarter was based on last year's low benchmark. Currently, overall industry profitability remains at a relatively low level in recent years, with the sales profit rate below the industrial average. Steel enterprises must still maintain an appropriate production rhythm and focus on improving operational quality and efficiency.
"By relying on the evaluation system of basic and leading indicators, establishing benchmarks for 'standardized enterprises' and 'leading standardized enterprises,' and implementing hierarchical and classified management of steel enterprises, we aim to guide enterprises to benchmark against advanced practices, transform and upgrade, and comprehensively enhance the industry's development level," Tao Qing said.
