NICE IS: "Competition in the Steel Industry Expected to Intensify Due to Ongoing Slowdown in Chinese Demand"

NICE IS Holds Credit Seminar 2025

NICE Investors Service (NICE IS) has forecast that competition in the global steel industry will continue to intensify due to ongoing trade barriers and a sustained slowdown in demand from China.

Song Donghwan, a senior researcher at NICE IS, analyzed the steel industry at the "NICE Credit Seminar 2025" held at the Korea Exchange on September 17, stating, "Export restrictions are worsening due to trade barriers, and investment burdens to secure competitiveness are expected to increase."

He also predicted that financial burdens would expand. He emphasized, "With ongoing supply-demand pressures and a deteriorating export environment, upstream companies have limited room to improve profitability. For downstream companies with weaker financial buffers, downward pressure on credit ratings is expected to intensify."

The steel industry has slowed down due to reduced demand within China. He explained, "Since 2021, China's steel exports have been increasing. After exports expanded, the regional supply-demand balance in Korea, China, and Japan worsened. Although there is a recent trend of production cuts, there is uncertainty as to whether this will lead to an improvement in supply-demand conditions."

He further explained that the strengthening of trade barriers is also having a negative impact. He analyzed, "Since the launch of the second Trump administration, tariffs aimed at revitalizing the U.S. steel industry have been expanding. The strengthening of trade barriers is resulting in increased domestic production competitiveness and a reduction in import volumes in the U.S."

Due to these unfavorable conditions, he predicted that it would be difficult for the steel industry to rebound in the short term. He stated, "The possibility of easing supply-demand pressures in the short term does not appear high. The decline in distribution prices for steel products and the intensification of competition are expected to persist for some time."

As a result, he forecast that financial pressure on downstream companies, compared to upstream companies, would intensify, negatively affecting credit ratings. He explained, "Given the negative business environment, the decline in performance for downstream companies is expected to be more pronounced. Downward pressure on credit ratings is likely to expand, particularly among downstream companies with poor financial buffers."

This content was produced with the assistance of AI translation services.