One-third of Chinese steel companies in danger of bankruptcy

The Chinese steel industry is going through a darker period than ever before. Analysts warned that the steel industry could face difficulties even in 5 years and that one-third of the steel companies in the country are at risk of going bankrupt.

Among the most affected sectors are steel and iron ore. The current crisis began a year ago when China's leading real estate developer Evergrande announced that it could no longer pay off its $300 billion debt.

While less than 20% of companies reported profits in July, recently published estimates show that only about 5 out of 25 steel companies listed in the country expect their profits to increase in the first half of 2023.

China is not only one of the world's largest steel producers, but also the largest steel consumer. The country became the largest steel producer in 1996, with production reaching a record 1.07 billion tons in 2020.

At present, China's steel production capacity is 1.2 billion tons per year, and annual consumption is around 1 billion tons. The Evergrande real estate crisis has led to the closure of many projects, reducing steel consumption. About 29% of real estate companies in China have declared bankruptcy.