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China’s Steel Sector Recovers Amid Production Regulation, Impacting Asian Markets

China’s steel sector is showing signs of recovery amid calls for production regulation, influencing the broader Asian steel market. “China’s steel sector PMI increases to 50.5 percent in July 2025” indicates a significant rebound, while simultaneously “CISA calls on Chinese steelmakers to self-regulate production” to address supply-demand imbalances, a reaction to “Steel prices under pressure: CISA calls for market self-regulation.” The observed satellite activity of Baowu Group Echeng Iron and Steel shows decreases, which may be influenced by these calls for production cuts.

Bar chart and satellite map of steel production activity in Asia

The mean steel plant activity in Asia shows a decrease in activity from February to August. JSW Steel Salem, Welspun Steel Plant and Baowu Group Echeng all show decreased production activity from February to August, with Baowu Group Echeng showing the most significant decrease in activity.

JSW Steel Salem, located in Tamil Nadu, India, is an integrated steel plant primarily using BF technology. The plant produces both semi-finished and finished rolled products, targeting sectors like energy, building, and automotive. Activity decreased steadily from 66% in February to 56% in July. There is no directly attributable news to explain the continued activity decline.

Welspun Steel, based in Gujarat, India, operates an integrated DRI-based steel plant, producing crude and semi-finished steel products such as TMT rebars. Its activity also declined steadily from 67% in February to 61% in July. No explicit news connection could be established for the observed activity trend.

Baowu Group Echeng Iron and Steel, located in Hubei, China, is an integrated BF/BOF steel plant with a crude steel capacity of 4.4 million tonnes. It specializes in finished rolled products, including various steel wire rods. The plant’s activity has decreased significantly from 37% in February to 22% in July, possibly aligning with “CISA calls on Chinese steelmakers to self-regulate production.” However, this remains speculative.

The observed decrease in activity at Baowu Group Echeng Iron and Steel, potentially linked to CISA’s call for production cuts and the improving PMI (“China’s steel sector PMI increases to 50.5 percent in July 2025”), could lead to a tightening of supply in specific steel product segments, especially wire rods.

Procurement Actions:

  • Steel buyers focusing on wire rods should closely monitor the output of Baowu Group Echeng Iron and Steel and consider diversifying suppliers to mitigate potential price increases driven by supply constraints resulting from production cuts.
  • Given CISA’s emphasis on self-regulation (“Steel prices under pressure: CISA calls for market self-regulation”) and the simultaneous profit improvement (“CISA: China’s steel industry’s profit improves in Jan-Jun 2025“), procurement professionals should anticipate potential, coordinated price increases from Chinese steelmakers and factor this into their budgeting and negotiation strategies.