Steel enterprises have successively disclosed their 2024 annual reports.

According to Wind statistics from Yicai.com, among the 16 steel enterprises that have released their performance reports, 14 have seen a year-on-year decline in both revenue and net profit, accounting for approximately 87%, and the average growth rate of the industry's net profit is -97.6%.

In the spot market, steel inventories are piling up and steel prices are fluctuating and declining. On April 18th, the main contract of rebar futures closed at 3,087 yuan per ton, with a cumulative decline of over 7% for the year.

As a highly cyclical industry, the steel sector is undergoing profound adjustments in its market size and demand structure in 2025. Pan Fujie, director of the Steel Logistics Committee of the China Federation of Logistics and Purchasing and CEO of Zhuoganglian, mentioned at the 14th China Steel Logistics Summit Forum recently that the current demand for traditional construction steel is declining, while the demand in high-end manufacturing, green manufacturing, photovoltaic, new energy and other fields is gradually increasing.

Pan Fujie believes that as a major global producer and seller of steel, China's steel industry has been accelerating technological innovation in recent years. The future development trend of the industry is to deepen the collaborative cooperation of the industrial chain and accelerate technological innovation at the same time. According to statistics from Zhuoganglian, as of the first half of 2024, 47 enterprises have established smart factories. In the future, more enterprises will bring growth by transforming towards high-end, intelligent and green manufacturing.

The contradiction between supply and demand still exists, and the performance of steel enterprises is under pressure

Specifically, there will be four steel enterprises with annual revenue exceeding 100 billion yuan in 2024.

Among them, Valin Steel (000932.SZ) had the highest revenue during the reporting period, reaching 144.685 billion yuan, a year-on-year decrease of 12%, and its net profit was 2.03 billion yuan, a year-on-year reduction of 59.9%

Secondly, there are CITIC Special Steel (000708.SZ), Shougang Co., LTD. (000959.SZ), and Ansteel Co., LTD. (000898.SZ), with operating revenues of approximately 109.2 billion yuan, 108.3 billion yuan, and 105.1 billion yuan respectively.

However, Ansteel Co., Ltd. suffered a net loss attributable to shareholders of 7.122 billion yuan in 2024, making it the company with the largest loss among the 16 steel enterprises surveyed this time. Including the other five loss-making enterprises, nearly 40% of steel enterprises recorded losses last year.

Overall, strong supply and weak demand remain the main contradiction in the steel industry at present. Chen Yuqian, deputy secretary-general of the China Iron and Steel Association, also analyzed at the above-mentioned forum that the apparent consumption of steel has been rising year by year since 2016, reaching a peak in 2020, and has been declining year by year in the past five years. In 2024, China's crude steel output decreased by 17.38 million tons year-on-year, a decline of 1.7%. The apparent consumption of crude steel decreased by 43.98 million tons year-on-year, a decline of 4.7%.

Since the beginning of this year, steel output has seen a slight increase again. According to the data released by the National Bureau of Statistics, in the first quarter of 2025, the country produced 259.33 million tons of crude steel, an increase of 0.6% year-on-year. The production of pig iron reached 216.28 million tons, increasing by 0.8% year-on-year. Steel production reached 358.74 million tons, increasing by 6.1% year-on-year.

In terms of raw materials, the current high monopoly price of imported iron ore is also the main reason eroding the profits of steel enterprises. Since the beginning of this year, the price of imported iron ore has remained at a high level and fluctuated continuously, while the price of coking coal has continued to decline. Wind data shows that the average price of coking coal in the first quarter decreased by 38% year-on-year, while the average price of iron ore only dropped by 21% year-on-year.

A review of the performance data of steel enterprises in 2023 and 2024 by journalists reveals that the performance of some steel enterprises has improved.

Four enterprises, including Shagang Co., LTD. (002075.SZ) and Ansteel Co., LTD. (000898.SZ), saw a slower year-on-year decline in their net profits attributable to shareholders in 2024 compared to 2023. During the same statistical period, the net profit growth rates of Nanjing Iron & Steel Co., LTD. (600282.SH) and Ningbo Gold & Steel Co., LTD. (603995.SH) turned from negative to positive.

According to statistics from the China Iron and Steel Association, the profit levels of member enterprises in January and February 2025 were relatively low but better than in the previous two years. It is expected that the overall profit situation of the steel industry in the first quarter will be better than that of the same period last year.