Some Chinese steel mills have ignored calls to curb output and reduce inventories, leaving the sector oversupplied and struggling for profitability, according to a commentary published by the industry’s main association.

Disregarding earlier guidance, offending mills have instead rushed to raise production at the first sign of an upturn in the market, according to the commentary published Friday in the official newspaper of the China Iron and Steel Association and posted on its WeChat account.

“Self-discipline and production control are the only way out for the entire industry,” the commentary in China Metallurgical News said, warning that steelmakers’ profits would continue to decline if output isn’t reined in. Prices would also fall if inventories are not controlled, it added, without naming individual companies.

The latest appeal for self-discipline follows a plea by CISA in September for mills to control production. That missive was jointly initiated by 44 major steelmakers including China Baowu Steel Group Corp. and Shougang Group Co.

Mills in China, by far the world’s largest steel producer, have been squeezed by a combination of weak demand, rising supply and high raw material costs this year. Around 56% of the association’s key member mills were loss-making in September, according to preliminary data cited in a second commentary published in the same newspaper on Saturday.

In the first nine months of 2026, Chinese steel output fell 2.9% year-on-year to 725 million tons, it said, citing National Bureau of Statistics data. But consumption dropped 3.8% to just 625 million tons – a faster rate of decline that’s “a sword of Damocles hanging over the entire industry,” according to the earlier commentary.

“The contradiction between strong supply and weak demand has not only failed to ease,” it said. “It’s been exacerbated by the wishful thinking of some enterprises that they can increase production while others limit it.”