Rebar steel futures in China have decreased to their lowest level in four weeks, falling below 3,090 yuan (approximately 450 dollars) per ton. This price drop occurred following the reopening of Chinese markets after a week-long holiday and ongoing pressure on profit margins in the steel industry.
Profitability Status of Steel Producers
According to industry data, only 6.9 percent of steel producers in China managed to turn a profit by the end of September this year. This situation reflects serious challenges in the industry caused by declining demand and rising production costs. In this context, hot metal production has decreased to an average of 2.34 million tons per day, marking the lowest level in the past six months.
Equipment Maintenance and Operational Pressure
Reports indicate that some steel producers in China have begun conducting maintenance on their equipment or are considering planning for such work. This action is due to increasing financial pressures and losses resulting from declining demand and construction activities. The Chinese steel industry is also facing weak demand and ongoing stagnation in the real estate market, which has severely impacted production and sales.
Meanwhile, data from the World Steel Association shows that global crude steel production in August decreased by 1.2 percent compared to last year, reaching 144.2 million tons. This production decline reflects the challenges facing this industry globally.
Given the current conditions, it is expected that the negative trend in China's steel industry will continue until demand reaches a stable level. This could have serious implications for the steel supply chain and global prices.
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