BUSINESS-ECONOMY
Conditions in China's steel industry are like a 'harsh winter' which will be 'longer, colder and more difficult to endure than we expected,' China Baowu Steel Group Corp. Chairman Hu Wangming said while addressing staff at the company's half-year meeting, warning of a worse challenge than major traumas in 2008 and 2015. The world's largest steel maker issued a warning about a crisis in the industry unfolding in China, carrying the potential to ripple around the globe and plunge the sector into a deeper downturn. This comes as steel production in July plunged about 9 per cent, the lowest figure reported in 2024. Conditions in China's steel industry are like a 'harsh winter' which will be 'longer, colder and more difficult to endure than we expected,' China Baowu Steel Group Corp. Chairman Hu Wangming said while addressing staff at the company's half-year meeting, warning of a worse challenge than major traumas in 2008 and 2015. The ailing Chinese economy is increasingly on the radar view of global investors, even as they are also framing the possibility of a recession in the US—where the Federal Reserve is heading toward interest rate cuts. For commodities, including steel, the warning from Baowu underscores the risks to demand and prices, as well as what ArcelorMittal SA, the industry No. 2, termed an "aggressive" surge of exports from China. The Chinese steel market is flashing multiple warning signs. By far the world's largest, it still feels the protracted property downturn showing no signs of ending, and factory activity remains subdued. Baowu produces about 7 per cent of global steel on its own, and its commentary is closely tracked to gauge the market mood in the Asian nation. The blunt message from Hu likely to resonate among rivals in Asia, Europe, and North America is that, as they struggle with a new wave of Chinese exports, often through calls for trade measures. Shipments from China are on pace to hit about 100 million tons this year, the highest since 2016, as producers scramble to offset a domestic slowdown. China's steel industry plunged into devastating slumps during the Global Financial Crisis of 2008-2009 and again in 2015-2016. In both cases, the crises were ultimately resolved by massive stimulus — a prospect that looks more remote in 2024 as President Xi Jinping bids to reshape the economy. Baowu didn't offer much information on the causes of the current downturn, focusing on how employees should respond by preserving cash and minimising risks. 'Financial departments at all levels should pay more attention to the security of the company's funding,' the statement said, with a need to strengthen controls, including for overdue payments and detecting fake trades. 'In the process of crossing the long and harsh winter, cash is more important than profit.' A journalist, writing for the WION Business desk. Bringing you insightful business news with a touch of creativity and simplicity. Find me on Instagram as Zihvee, tr None
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