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| CISA |
Steel Sheet Prices Cut as Automakers Delay Payments
China’s electric vehicle (EV) price war is triggering financial stress across the country’s steel sector. According to the China Iron and Steel Association (CISA), automakers have demanded over 10% reductions in steel sheet prices since 2024. Some are also delaying payments for months, disrupting cash flow and undermining steel plant stability.
CISA warned that intense automotive price competition is placing “considerable pressure on raw material suppliers,” aggravating a market already weakened by the real estate downturn and economic deceleration. Steelmakers, especially those producing flat products for automotive applications, now face mounting operational risks.
Calls for Market Coordination Amid Record EV Output
In response, CISA urged deeper coordination between the steel and automotive sectors. This comes after three major Chinese automakers—Dongfeng, Guangzhou Auto, and China FAW—pledged to standardize invoice payment terms to 60 days. Chinese regulators have also flagged concerns over supply chain financing and industrial overcompetition.
China’s EV production surpassed 30 million units in 2023 and 2024, and is expected to grow further in 2025. However, profitability is declining. According to official data, automotive sector margins fell from 7.3% in 2018 to 4.3% in 2024, and to just 3.9% in Q1 2025. This squeeze is being passed down the supply chain, placing additional strain on steelmakers producing automotive-grade flat products—an output that reached 40 million tonnes last year.
Export Volumes Rise as Domestic Profitability Falls
Amid domestic headwinds, Chinese steel producers are ramping up exports. In May 2025, China exported 10.58 million tonnes of steel—up 9.9% year-on-year and 1.1% from April. While this helps absorb surplus capacity, it offers little relief to mills heavily tied to the domestic EV industry. Price pressure at home is increasingly at odds with export opportunities abroad.
ScrapInsight Editorial Commentary
The EV sector’s cutthroat pricing now threatens upstream suppliers that form the backbone of China’s industrial ecosystem. Unless automakers and steel mills align on payment terms and cost-sharing mechanisms, deeper market imbalances could emerge. Coordinated policy responses and industry-led frameworks will be key to maintaining long-term supply chain resilience.
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