Likelihood of large-scale steel production cuts in Q4: What's the premise?

Source: Mysteel Nov 28, 2025 14:07

The major factors determining whether China's steel mills take production cuts and the degree of the reduction depend mainly on their profitability and in-plant inventory. This article reviews the fundamental performance of the steel sector during significant periods of reduced hot-metal production since 2022. Domestic steel mills are expected to show limited motivation for production cuts before year-end, and the actual production reduction volumes will likely be limited as well. This is primarily because the current profitability and inventory situation of steel mills have not deteriorated to the extent of previous proactive production-reduction cycles. However, closer attention should be paid to frequent environmental restrictions and other policy requirements.

Profitability and Inventory Pressure Dominate the Production Cut Triggers Steel mill profitability and in-plant steel inventory influence each other, typically moving in opposite directions. Increased product-delivery pressure of steel mills usually first compresses steel mill profitability, which subsequently affects market expectations and mills' production. An analysis of the fundamentals behind the

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