China’s steel crisis is driving a wave of bankruptcies and accelerating industry consolidation, according to a Bloomberg Intelligence (BI) report.
Nearly three-quarters of Chinese steelmakers reported losses in the first half, with companies like Xinjiang Ba Yi Iron & Steel Co., Gansu Jiu Steel Group, and Anyang Iron & Steel Group at the highest risk of bankruptcy and potential acquisition targets, senior BI analyst Michelle Leung noted.
This consolidation aligns with Beijing’s goal to concentrate the industry, aiming for the top five firms to control 40pct of the market and the top 10 to hold 60pct by 2025. While these targets seem achievable, China will still lag behind South Korea and Japan, Leung added.
The country’s ongoing property crisis and sluggish economic growth are reshaping its steel sector. China Baowu Steel Group’s CEO recently warned of a crisis surpassing those of 2008 and 2015. As domestic demand slumps, mills have ramped up exports, prompting a trade backlash from countries accusing China of dumping steel at below cost. However, China’s steel exports are expected to remain elevated until at least 2026, as overall production declines and trading partners impose stricter restrictions, BI said.
