China’s steel industry faces mounting challenges from overproduction and destructive internal competition that is disrupting market order and eroding industry profits. A stark illustration of this crisis emerged when financial analysis revealed that the combined annual net profits of China’s top four most profitable listed steel companies failed to match the earnings of a single Japanese competitor.
According to calculations by Yicai Global based on 2024 financial reports, Japan’s Nippon Steel Corporation generated net profits of 350.2 billion yen (approximately $2.37 billion USD) last year. In contrast, China’s five most profitable listed steel companies—Baosteel ($1.03 billion USD), CITIC Special Steel ($715 million USD), Nanjing Iron & Steel ($315 million USD), Hualing Steel ($284 million USD), and Jiuli Hi-Tech Metals ($208 million USD)—earned significantly less individually.
Despite China’s dominance in production volume, with China Baowu Group leading globally at over 130 million tons of crude steel output, profitability remains elusive. The World Steel Statistics 2025 shows multiple Chinese steel companies among the world’s top 10 producers, yet their profit margins lag far behind those in the Japanese steel industry.
Industry experts attribute this disparity to structural advantages held by Japanese steel companies. Ge Xin, deputy director of Lange Steel Research Center, explains that Japanese firms secured overseas mineral resources through equity participation decades ago, reducing raw material costs. Additionally, they focus on high-end steel products, achieving superior profit margins.
Following Japan’s real estate bubble collapse in the 1990s, Japanese steel companies pivoted from construction materials to specialized products, including high-strength automotive steel and precision materials for electronics. Meanwhile, Chinese companies remain trapped in homogeneous competition, with even previously profitable sectors like cold-rolled products experiencing continuous price declines.
China Steel Association President Yao Lin recently acknowledged the industry’s failure to control capacity expansion and promote consolidation, citing persistent low-price competition strategies that continue undermining market stability and industry profitability.
Source: Central News Agency (Taiwan), July 20, 2025
https://www.cna.com.tw/news/acn/202507200072.aspx