The country’s steelmakers have been battered by a wave of global steel price drops.
But China’s industries remain resilient and their producers are doing well, despite falling demand, industry officials say.
The industry is also “tough” but not immune to the sharp falls, said Zhang Xiaoming, vice president of the China Steel Association, an industry group.
The downturns are the result of two factors, he said.
First, China’s factories have seen their capacity to make steel grow.
“That has created an additional pressure on the industry,” he said, adding that the industry has also been able to absorb some of the losses.
In recent years, steel production has grown faster than in other parts of the world, said Wu Hongwei, chief economist at the China Export-Import Bank.
“So the Chinese industry has grown stronger than the rest of the industry.”
But the industry faces a difficult time in the months ahead.
Chinese consumers have been demanding higher-quality products in large quantities and steel production is expected to drop as demand slows and prices increase.
The government has already ordered a series of cuts in the steel sector.
“If China does not reverse the price deflationary trend, it will face a crisis,” said Zhang.
The decline in global steel prices, meanwhile, has had an adverse effect on Chinese manufacturers.
Chinese factories have been able at times to cope, but the recent downturn has put pressure on their capacity, said Li Shihui, head of the research division at the Chinese Academy of Engineering.
“The industry is facing an extremely difficult situation,” said Li.
The China Steel Industry and the Government’s Measures to Strengthen the Economy and Economy Development, a study published last year by the Chinese National Development and Reform Commission, also noted the government’s measures to boost steel production.
The Chinese steel industry has a capacity of 2.5 million tonnes of steel a year and output is expected rise to 3.2 million tonnes a year by 2022, it said.
“A sharp increase in production capacity and demand can lead to the formation of a virtuous cycle of increasing output, higher production, and further higher demand,” the study said.
As for the steel industry’s capacity to absorb losses, Zhang noted that China has already seen its capacity to import raw materials drop by 80 per cent since the end of the year, adding, “It is not that we are helpless in this situation.”
He said the industry should focus on diversifying its supply chain and improving the quality of its products.
The Steel Industry’s Role in the Economy China is a major steel exporter and has the largest steel reserves in the world.
It is also a major supplier of steel products to the rest