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In the article, it is noted that despite some improvement in the steel market following a slight rebound in prices since late September 2012, the overall demand for steel remained weak. This was largely due to the government's continued implementation of "steady growth" policies, which helped stabilize the market to some extent. In the second half of 2012, the National Development and Reform Commission approved several key infrastructure projects, including 25 new urban rail transit projects and 13 highway developments. The number of newly started railway projects increased from 9 to 22, and the fixed-railway investment plan rose significantly from 516 billion yuan to 630 billion yuan.
As a result, fixed asset investment is expected to rise sharply in the fourth quarter, leading to a potential recovery in steel demand after a sluggish first three quarters. However, the steel industry still faces challenges, as production capacity far exceeds actual demand. This imbalance has kept steel prices weak, making it difficult for the market to see a significant upward trend. Industry experts remain cautious about whether the market will stabilize in the near future.
Another major issue is the negative growth in key sectors such as railway construction, real estate development, and shipbuilding. These industries have seen declining orders and output, contributing to weak demand for steel products. Meanwhile, the machinery, automotive, and home appliance sectors have also experienced slow growth or even price declines, further complicating the situation.
On the cost side, fuel prices have not dropped significantly, putting pressure on steel companies' profitability. Even though steel prices rebounded slightly after September, the cost of raw materials like iron ore also surged, with spot prices rising by 180 yuan per ton. This has left steel producers under high cost pressures.
The financial performance of the steel industry has deteriorated, with losses continuing to mount. Although many steel companies have made efforts to improve efficiency, reduce costs, and expand markets, large and medium-sized enterprises are still struggling financially. As a result, steel prices are unlikely to see sustained growth in 2013.
Industry experts predict that China’s steel sector will continue to face challenges in 2013. While economic growth may stabilize, the industry will need to undergo a process of destocking and capacity reduction. Supply is expected to continue exceeding demand, and overall profitability will remain low. In response, the industry must shift its focus from scale to quality, improving product diversity, quality, and customer service to gain more market share and increase revenue.
This transition will be crucial for the long-term sustainability of the steel industry, as it moves toward a more efficient and competitive model.