Chinese Steelmakers Face New Pressure Amid Rising Raw Material Costs

Raw Material Costs Challenge Chinese Steelmakers

Chinese steel mills confront rising costs for iron ore and coking coal, threatening profits after a strong third quarter. Analysts warn margins may shrink further as prices climb. Iron ore futures in Singapore increased for the fourth consecutive month, while Dalian coking coal reached its highest level in nearly a year. This surge impacts producers’ profitability across rebar, hot-rolled coil, and billet markets.

Profitability varies among producers. Baosteel posted high Q3 profits, Hesteel rose 45% year-on-year, and Maanshan Iron & Steel achieved its best results in two years. Meanwhile, Angang Steel reported deeper losses compared to Q2. These discrepancies highlight an uneven recovery in China’s steel sector.

Industry Trends and Production Outlook

Qin Cui of the China Iron and Steel Research Institute noted that manufacturers using electric arc furnaces still operate at a loss. Domestic industrial activity declined further in October, according to recent purchasing managers’ surveys. The government focuses on limiting excess production through capacity controls rather than direct cuts. Steel output dropped 4.6% in September 2025 versus 2024, marking the fourth consecutive monthly decline.

China’s steel production from January to September 2025 fell to 746.25 million tons, a 2.9% decrease year-on-year. Rising material costs combined with weak domestic demand create a challenging environment for the industry. Foreign demand may play a crucial role in stabilizing revenue streams in coming months.

SuperMetalPrice Commentary:

Rising raw material costs signal a potential turning point for Chinese steelmakers. Profit volatility underscores the need for efficient supply chain management and strategic capacity planning. SuperMetalPrice anticipates continued pressure on margins, with foreign demand emerging as a critical stabilizer. Investors and global buyers should monitor price trends and production adjustments closely.