Chinese steel companies are planning to cut production in response to falling domestic demand, according to Bloomberg. Despite a 1.7 percent year-on-year decline in steel production in 2024, output remained above 1 billion tons for the fifth consecutive year. However, domestic consumption is decreasing, and the plants' unprofitability is reaching critical levels. The Chinese government is shifting its focus to greener, high-tech growth and consumption, reducing the importance of steel to the economy.

Bloomberg Intelligence forecasts that China's steel consumption could drop from over 1 billion tons in 2020 to less than 800 million tons by 2030. The worst-case scenario predicts a fall to 525 million tons by the end of the decade. This unfavorable outlook is driving industry consolidation, as steelmakers seek to maintain cash flows and margins. According to the National Bureau of Statistics, the sector suffered losses for most of the year, with total debt reaching a record 5.1 trillion yuan ($696 billion) by November 2024.

Data from 59 Chinese steel mills showed the weakest free cash flow for the third quarter since 2015. In 2023, the steel industry's contribution to China's economy was 5.7 percent of GDP. This decline may impact growth targets set by local governments, particularly in leading steel provinces like Hebei.

Tangshan, the main metallurgical center of Hebei, saw its steel industry perform poorly in the first 10 months of 2024, with losses of 3.1 billion yuan. Global anti-dumping measures and declining exports further challenge Chinese steelmakers. Domestic market demand from industry and automakers helps offset the weak housing market but is insufficient.

Experts predict that 2024 will be the last year when steel production in China exceeds 1 billion tons, with volumes expected to fall below this level in 2025.