China's Steel Industry Navigates Property Slump with Export Surge and Green Transition: 2024 Capacity Drops 4.3% as Mills Prioritize Value over Volume
China’s crude steel output fell to 1.02 billion tons in 2024 (-4.3% YoY) amid prolonged property sector contraction, while steel exports hit a record 100 million tons (+23%) and top mills’ EBITDA margins stabilized at 8.1% through cost optimization and premium product shifts, NBS data shows.
1. Capacity Rationalization Meets Property Downturn
Ministry of Industry and Information Technology (MIIT) statistics reveal:
● Steel Demand Shock: Property new starts plunged 28% in 2024, slashing construction steel demand by 45 million tons
● Capacity Discipline: Active production controls under the “Carbon Peaking Steel Roadmap” reduced blast furnace utilization to 78% (2023: 85%)
● Export Lifeline: ASEAN infrastructure projects absorbed 58% of China’s record steel exports, led by galvanized coils (+37%) and H-beams (+41%)
2. Profitability Through Strategic Pivots
Key financial metrics highlight industry adaptation:
● Premium Product Mix: CRRC’s high-end rails captured 33% of global high-speed rail contracts, lifting ASPs by $120/ton
● Cost Leadership: Baowu Group’s AI-powered ore blending cut iron ore costs by 11%, maintaining 9.2% EBITDA margin
● Green Premiums: 62% of mills now produce low-carbon steel certified under EPD China, commanding 5-8% price premiums
3. Iron Ore Dynamics Reshape Supply Chains
Despite 2024 average import ore prices dropping to $105/ton (-18% YoY), challenges persisted:
● Inventory Overhang: Port stockpiles peaked at 155 million tons in Q2 as mills delayed purchases
● Diversification Drive: China’s scrap steel usage ratio climbed to 26% (2023: 21%), reducing iron ore dependency
● Price Volatility: Vale’s Q3 supply disruption caused 26% price spikes, accelerating shift to Mongolian coking coal
4. Policy Catalysts Driving Structural Reform
MIIT’s 2024 measures redefined sector priorities:
● Capacity Swap 2.0: 38 million tons of outdated capacity replaced by 12 mega-electric arc furnace (EAF) complexes
● Ultra-Low Emissions Deadline: 80% of mills completed retrofits, cutting PM2.5 emissions by 44%
● R&D Tax Incentives: Steel tech patents surged 61%, led by HBIS’s hydrogen-based direct reduction pilot
5. Outlook: Consolidation and Global Competition
Industry consolidation saw top 10 producers’ market share rise to 48% (2023: 42%). Analysts warn of:
● Overcapacity Risks: 18 million tons of new EAF capacity due online by 2025 Q3
● Trade Tensions: EU’s CBAM preliminary tariffs could impact 15% of China’s steel exports
● Scrap Economy: Urban mine projects aim to double scrap utilization to 35% by 2026
“The property slowdown forced a necessary evolution,” stated CISA Vice Chairman Luo Tiejun. “Our focus has shifted from feeding construction booms to leading in advanced materials and circular production – the true test begins in 2025.”
