China’s largest steel producer has reportedly warned of a crisis in the sector that could affect the worldwide industry.
China Steel Giant Warns Of Looming Industry Crisis
Hu Wangming, the chairman of China Baowu Steel Group, stated that the sector is experiencing a “harsh winter”. He said that this prolonged slump will be “difficult to endure” and will pose a tougher challenge than the 2008 and 2015 crises.
Based on a Bloomberg report, global investors are keeping a close eye on China’s embattled economy while considering the possibility of a US recession. Baowu’s warning regarding demand and consequent pricing issues aligned with ArcelorMittal SA’s (MT) statement that there is an “aggressive” surge in Chinese steel exports.
The property market and steel factory stagnation in China both significantly contribute to the current situation. According to Bloomberg, “Baowu alone produces about 7% of the world’s steel”. This impacts steel companies in Asia, Europe and North America. Chinese exports head towards the 100-million-ton mark for 2024 as producers scramble to negate the domestic slump.
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Germany’s ThyssenKrupp AG (TKA.DE) spotlighted the industry dilemma when it reported substantial losses in earnings. The firm stated that China’s increasing steel exports are creating an “unsustainable” situation.
Singapore recorded a drop of 3.4% in iron ore futures, the lowest it has been since May 2023. Rebar futures in Shanghai fell by more than 4% to record the cheapest levels since 2017. In a statement, Baowu noted:
Financial departments at all levels should pay more attention to the security of the company’s funding. In the process of crossing the long and harsh winter, cash is more important than profit.
