The world's biggest steelmaker warns of a looming industry crisis that will outpace 2008's downturn

• A "harsh winter" is looming over China's steel sector, industry leader Baowu said.
• The firm expects the crisis to be worse than 2008 and 2015 downturns.
• Chinese producers are turning to foreign markets to unwind their steel supply.

Steelmaker giant Baowu warned that the industry is falling into dire straits, as a severe Chinese downturn could spell trouble for worldwide producers.

According to a company statement cited by Bloomberg , the firm's chair Hu Wangming told staff that a "harsh winter" was looming over the country's steel sector, with conditions that are "longer, colder and more difficult to endure than we expected."

Though China's industry has experienced serious difficulty in 2008 and 2015, producers should brace for a more extreme challenge, Hu added. Those crises were eventually rectified by stimulus aid, Bloomberg said, but that's a less certain prospect given Beijing's current economic approach .

Although Baowu itself offered few explanations for the sector's gloomy outlook, a lot can likely be explained by general conditions roiling through China. Momentum in the world's second-largest economy has been lackluster since the pandemic, while industrial production and real estate demand have suffered.

According to data cited by the Financial Times , steel-intensive construction starts have fallen 24% in this year's first half, extending last year's 21% reduction.

That's left steelmakers with more steel supply than they can use, and the industry is leaning on foreign markets to resolve this.

But dumping large amounts of the metal in other countries bodes ill for ex-China producers.

Prices of steel-related components are already sliding. Iron ore futures in Singapore fell as low as 3.4% to $95.2, Bloomberg said, the cheapest level since May 2023. Meanwhile, rebar futures slumped 4% to a 2017 low.

As the world's largest steelmaker, Baowu's words carry weight among global players. According to Bloomberg, it makes up 7% of the international steel supply.