TOKYO -- Pressure on the Chinese steel sector has intensified as producers suffer from demand-sapping economic stagnation coupled with rising costs, especially for coal, raising the prospect that they will push more output abroad. That approach to dealing with diminishing margins, in turn, risks inflaming global trade tensions.

Gansu Jiu Steel Group Hongxing Iron and Steel, a Shanghai-listed company controlled by the northwestern provincial government of Gansu, reported a net loss of 813 million yuan ($122 million) for the July-September quarter, far worse than the 61 million yuan loss it recorded a year earlier.

The financial performance in the third quarter also marked a sharp drop from the first six months, when the net loss amounted to 216 million yuan. Revenue fell 3.4% year-on-year in the third quarter to 7.8 billion yuan, reversing from a 3.6% increase to 16.1 billion yuan in the first half.

In a Friday night disclosure, the company described an industry situation in which "supply is strong but demand is weak." It lamented the "continuous shrinkage of real estate and infrastructure demand" and noted a "drastic slide in fixed-asset investments," along with some fuel and materials costs "hovering at high levels."

The Gansu steel company added that these conditions have worsened, "especially entering the third quarter, as steel prices were depressed while fuel prices exhibited high volatility." Angang Steel, the core listed arm of Ansteel Group -- the world's third-largest steelmaker by volume -- reported a net loss of 1.98 billion yuan for the third quarter, more than double its 876 million yuan loss a year earlier. The red ink in the July-September period alone nearly matched its first half net loss of 2.04 billion yuan.

The company explained that the steel industry is "operating in a weak cycle with low sentiment," with a supply glut depressing prices.

On the other hand, prices of coking coal and other raw materials and fuels "continued to rise," Angang Steel said. Coal demand and prices have been buoyed by oil supply disruptions stemming from the Iran war, boosting the fortunes of coal suppliers.

Angang Steel said that it made further cost-cutting measures but that they were "still insufficient to make up for the shortfall brought about by the narrowing of the price spread between procurement and sales." The production line at a cold rolling plant is seen during a government-organized media tour at Baoshan Iron & Steel, a subsidiary of China Baowu Steel Group, in Shanghai.

Shandong Iron and Steel, a unit of top global producer China Baowu Steel, also regressed in the third quarter, taking a net loss of 146 million yuan compared to 29 million yuan during the first half. The reasons were similar to its peers, with the company saying it is being "squeezed from both ends," referring to the fall in market prices and rise in materials costs.

Chongqing Iron and Steel, another Shanghai-listed Baowu group company, reported a third-quarter net loss of 125 million yuan, worsening from 87 million yuan for the same period a year ago and 178 million yuan for the first half of 2026.

At Maanshan Iron and Steel, a Baowu company based in the inland province of Anhui, a net profit of 158 million yuan logged for the third quarter of last year reversed to a net loss of 108 million yuan for the latest quarter. Citing the same pressures as the others, the company said it expects the tough conditions to persist in the fourth quarter, given that "demand is insufficient, prices are under pressure and competition is intensifying."

Xinjiang Ba Yi Iron and Steel also slipped into the red in the third period, going from a net profit of 124 million yuan a year earlier to a net loss of 220 million yuan. The Urumqi-based Baowu company said it will further "cultivate" steel product markets in adjacent Tibet and overseas, given the harsh reality at home. It vowed to "continuously expand export volume and boost export market share in the Central Asian market." When it comes to exports, Baoshan Iron and Steel, the core listed unit of Baowu, is leading the way. It disclosed that it achieved an export order volume of 5.87 million metric tons during the first nine months of the year, increasing by 704,000 tons from the same period a year earlier.

Chinese steel exports fueled by chronic overcapacity and weak domestic demand are a core issue behind trade friction with the rest of the world. To mitigate the tensions, Beijing implemented a new export licensing system from the beginning of the year, with the commerce ministry and the general customs administration jointly announcing a list of about 300 steel products subject to controls.

This appears to have had a certain impact, as the overall steel export volume for the first nine months of the year decreased by 2.6% year-on-year. Nevertheless, the volumes remain substantial and the pace has picked up: Exports of finished steel in September reached 10.49 million tons, surpassing 10 million tons for the fifth consecutive month.

Steel rolls from China are stacked after being unloaded at the port of Valparaiso, Chile, in July 2025. Chinese steel exports are a key factor in trade tensions.

Alicia Garcia-Herrero, chief economist for the Asia-Pacific region at French investment bank Natixis, noted that governments worldwide are on guard against the onslaught of Chinese exports, with steel being a focus alongside chemical products and electric vehicles. A number of Asian countries have implemented defensive measures, such as India imposing a three-year safeguard duty of 11%-12%, and Vietnam setting anti-dumping duties of up to 27.8% on hot-rolled coil from China.

"A European instrument capable of restricting Chinese access to entire sectors of its market within weeks would change the calculus for Asia," she said, as that would shift additional export volumes to the region.

"The question," Garcia-Herrero said, "is whether Asian countries will move beyond product-by-product remedies, shift towards safeguards and import-surge monitoring, and open investigations pre-emptively in the sectors Europe is expected to target first," such as steel, chemicals, machinery, batteries and solar.