The Impact of Price Wars on Steelmakers in China
The ongoing price war in China’s electric vehicle (EV) industry is having a significant impact on the country’s steelmakers. As automakers compete to lower prices, steelmakers are feeling the pressure. According to the China Iron and Steel Association (CISA), the fierce competition in the EV sector is deepening financial challenges for steel manufacturers. Some automotive companies are demanding more than a 10% reduction in the cost of steel sheets. This, combined with delayed payments of up to several months, is creating a financial burden on steel mills.
Steelmakers Face Multiple Challenges Amid Economic Slowdown
This price war is not the only hurdle for Chinese steelmakers. The steel industry has been grappling with a long-term real estate crisis, followed by a broader slowdown in economic growth. The pressures from the price war in the electric vehicle market are exacerbating the existing financial strains. Despite the challenges, the automotive industry remains a key consumer of steel. In 2024, the production of flat products used in the automotive sector reached 40 million tons. However, the profitability of China’s auto sector has been on a decline, dropping from 7.3% in 2018 to 3.9% in early 2025.
CISA Calls for Industry Cooperation
In response to the mounting pressures, CISA has urged collaboration between the automotive and steel industries to create a fairer market. Steelmakers are calling for a more balanced pricing structure, while automotive manufacturers, facing their own financial difficulties, are seeking cost reductions. As China aims to balance the competing needs of its industries, this ongoing price war could have far-reaching implications for both sectors.
SuperMetalPrice Commentary:
The ongoing price war in China’s EV sector is indicative of larger global trends where fierce competition among automakers and raw material suppliers can have unexpected consequences. The steel industry, particularly in China, plays a pivotal role in supporting the manufacturing of electric vehicles, and fluctuations in steel prices can influence the overall profitability of both sectors. In the coming months, industry players will need to strike a balance to ensure stable production and sustainable growth for both the steel and automotive sectors. China’s evolving economic conditions and trade dynamics will continue to shape the steel industry’s performance.
Leave a Reply
You must be logged in to post a comment.