The iron and steel industry's profits increased by 1.9 times in the first three quarters, an improvement from the same period of 2024, said Jiang Wei, vice-chairman and secretary-general of the China Iron and Steel Association.

However, the sector is still facing pressure to balance demand and supply, and steelmakers must exercise greater self-discipline in the fourth quarter by curbing production and cutting inventories to avoid disorderly price competition, Jiang said during a recent news conference.

During the first three quarters, industry revenue fell at a slower pace than costs.

Major steel enterprises in the country recorded a combined operating revenue of 4.56 trillion yuan ($640 billion), down 2.36 percent year-on-year, while operating costs dropped 3.88 percent to 4.26 trillion yuan — a 1.52 percentage point difference between the two declines.

Total profits reached 96 billion yuan, up 1.9 times year-on-year, and the average sales profit margin stood at 2.1 percent, an increase of 1.39 percentage points from a year earlier.

Steel output and apparent consumption both continued to decline. In the first three quarters, China produced 746 million metric tons of crude steel, down 2.9 percent year-on-year. It is expected to maintain a decline for the full year as well, meeting the crude steel output control target.

Apparent consumption of crude steel stood at 649 million tons during the same period, down 5.7 percent year-on-year. Overall, both output and consumption are trending downward, with consumption declining faster than production.

Xu Xiangchun, information director and analyst at iron and steel consultancy Mysteel, said the improvement in the sector's profits during the first three quarters mainly stemmed from lower production costs and raw material prices — especially the sharp decline in coking coal and coke prices this year — which drove down costs faster than revenue.

Efforts by enterprises to reduce costs, improve efficiency, strengthen self-discipline and adjust product structures also contributed to the gains, he said. "However, profit growth driven mainly by lower costs represents a short-term improvement and is not sustainable," Xu added.

The steel industry is expected to upgrade to meet fresh demand, improve product quality and cut costs, but producers should strictly implement national output control policies and measures for capacity replacement, Xu said.

In September, five government departments — including the Ministry of Industry and Information Technology — jointly issued a work plan for promoting stable growth in the iron and steel sector (2025-26).

The plan identifies demand-supply imbalance as "the main contradiction affecting the quality and efficiency of industry development", and sets the overall target of achieving an average annual growth rate of around 4 percent in industrial added value.

Maintaining dynamic balance between supply and demand is key to ensuring stable operation and improving profitability in the steel sector, according to CISA. "In the face of weakening demand, the crucial step is to proactively adjust production rhythms and enhance supply-demand alignment," Jiang of CISA said.

The foundation for the steel market's new demand-supply equilibrium remains fragile, CISA said. "Historical data show that the steel market typically enters a demand off-season in the later part of the fourth quarter, when the pressure to maintain supply-demand balance tends to intensify," Jiang said.

Given the continued downturn in the property market in September, steel enterprises are expected to strengthen self-discipline in the fourth quarter by cutting production and reducing inventories as much as possible to avoid low-price, disorderly competition, Jiang said.

Jiang Xiaodong, deputy secretary-general of the CISA, also stressed the importance of avoiding disorderly competition while promoting a healthy balance between steel supply and demand.

He said the association has been working closely with government departments to develop a steel industry price supervision mechanism. The mechanism aims to leverage the industry's professional capacity to build a comprehensive price information monitoring system, a behavioral monitoring system, and benchmark cost indexes by region and product category.

"The goal is to establish a diversified governance model featuring corporate self-discipline, industry oversight, association coordination and government regulation — to curb and penalize vicious price competition, promote fair market behavior and eliminate inefficiency," he added.