China’s leading steel industry body has issued a warning that the intensifying price war in the country’s electric vehicle (EV) sector is placing growing financial strain on steel producers, Bloomberg reports.
In a statement published Tuesday in China Metallurgical News, the China Iron and Steel Association (CISA) said some automakers have been pressuring steelmakers to cut prices for steel plates used in vehicles by over 10% since last year. Additionally, certain car manufacturers have delayed payments to mills for several months, further exacerbating cash flow problems.
The EV industry in China is currently embroiled in intense price competition, with automakers slashing prices to attract consumers in an increasingly crowded market. This trend has led to sharp declines in stock valuations across the sector and has prompted government efforts to stabilize demand.
According to CISA, the effects of this price competition are being felt up the supply chain, particularly by steel mills already facing a difficult business environment.
“Automobile companies are fiercely competing on price, putting significant pressure on upstream raw material suppliers,” the association stated. “It has severely impacted mills’ stable operations.”
China’s steel sector has been struggling in recent years due to a combination of factors, including a prolonged slump in the property market and the broader economic impact of international trade tensions. The added pressure from the auto industry’s pricing strategies is compounding these challenges.
CISA, which represents major producers such as Baoshan Iron & Steel Co., called for improved coordination between the steel and automotive industries to promote healthier market practices. The group emphasized the need for collaboration to ensure sustainable development across both sectors.
The association’s comments come at a time when policymakers in Beijing are closely monitoring the effects of aggressive pricing in the EV market, as it continues to play a critical role in the country’s broader industrial strategy.
