China’s steel industry swung back into an aggregate loss in July after a brief second-quarter recovery, as domestic demand weakened faster than mills could cut production, with some China-based mill sources warning that steeper output curbs might be needed if a seasonal demand rebound in September falls short.

China’s steel sector posted an aggregate profit of 29.09 yuan billion ($4.33 billion) over January-July, down 51.2% year over year, according to National Bureau of Statistics data released Aug. 27.

Based on cumulative profits of 31.77 yuan billion in January- June, the sector recorded an aggregate loss of 2.68 yuan billion in July, compared with a profit of 17.25 yuan billion made in the same month of 2025. The previous monthly loss for the industry was recorded in March at 8.7 yuan billion.

Several steel mill sources said the return to losses was largely expected, as steel production cuts implemented by mills failed to keep pace with the decline in downstream demand, resulting in continued pressure on steel prices and margins.

One mill source added that the imbalance between weak end user demand and insufficient steel production cuts persisted in August, suggesting little improvement in the industry’s overall profitability.