**Abstract**: Wang Xiaoqi, vice president of the China Iron and Steel Association, stated on the 29th that the steel industry's profits in the first four months of this year were 1.3 billion yuan, 1 billion yuan, 260 million yuan, and 150 million yuan respectively. He emphasized that overcapacity remains the primary challenge behind the industry’s sluggish performance. Looking ahead, the association aims to bring approximately 80% of production capacity under standardized management by enhancing environmental regulations.
Wang made these remarks at the 10th Shanghai Derivatives Market Forum. He noted that the current comprehensive steel price index, compiled by the China Steel Association, stands at around 103 points, slightly above its 1994 starting point of 100. In contrast, the non-ferrous metal price index has seen multiple fluctuations during the same period, while steel prices have remained relatively stagnant.
The prolonged low pricing of steel products has led to six consecutive quarters of losses in the main business since the fourth quarter of 2011. The most severe loss occurred in the third quarter of last year, reaching 16.5 billion yuan. While some profit is still generated through investments in upstream mining and non-steel sectors, Wang pointed out that such a situation is unsustainable and illogical.
He attributed the ongoing losses primarily to severe overcapacity. In the first four months of this year, China produced 258 million tons of crude steel, an 8.4% increase compared to the previous year. Of this increase, 10 million tons ended up in storage. “This year’s steel demand is actually decent, but it’s being absorbed by the rapid expansion of supply,†he said.
To address overcapacity, raising environmental standards is considered one of the most effective measures. For steel mills that fail to meet environmental requirements, policies such as differentiated electricity pricing will be used to reduce their operational space. According to the "Regulations on Steel Industry Standards" issued by the Ministry of Industry and Information Technology, efforts will be made to bring about 80% of production capacity into standard compliance by the end of the Twelfth Five-Year Plan. Furthermore, standards may be further tightened, with another 80% of the remaining capacity expected to be evaluated and phased out over time.
Regarding short-term steel price trends, Wang noted that steel prices have dropped by roughly 10% this year. At the same time, coal prices, a key raw material for steel, have fallen by more than 10%, while iron ore prices have declined by about 3%.
In response to market volatility risks, Ye Chunhe, deputy general manager of the Shanghai Futures Exchange, announced that the exchange will actively prepare for the listing of hot rolled coil futures and iron ore price index futures, building on the success of rebar futures. These initiatives aim to provide better risk management tools for all participants in the steel industry chain.
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