Chinese steelmakers need to adopt more systematic measures to secure their raw material supplies, given the Chinese steel sector's persistently heavy reliance on supplies from overseas markets, according to a recent report by China Metallurgical News (CMN), the official media outlet of the China Iron and Steel Association (CISA).
The Chinese steel industry's reliance on imported iron ore and manganese ore has consistently exceeded 80 percent, with nickel ore-import dependence surpassing 90 percent and chrome ore approaching a near-total reliance at close to 100 percent, while Chinese overseas equity mines contribute less than 10 percent of total supply, as reported. However, China is largely self-sufficient in supplies of coal and fluxing materials.
Leading steel producers, including Baowu Group and Angang Group, have built strong and secure supply capabilities, while most steelmakers are still relatively weak in this regard. This makes it urgent for the steel industry to improve raw material and fuel supply security.
Baowu Group has established an iron ore carbon footprint tracking system, through which it prioritizes the procurement of high-grade iron ore such as Australian Pilbara iron ore, of which the carbon intensity is less than 1.8 mt of CO2 per mt of ore, aiming to respond to EU carbon tariff challenges.
Meanwhile, through its 'intelligent' ore blending base by the Yangtze River in East China's Zhenjiang city in Jiangsu Province, Baowu has built an integrated system that shortens the average iron ore delivery time to surrounding mills by 40 percent and improves inventory turnover by 30 percent, according to the report. Even under adverse weather conditions such as the Yangtze River flood season and extreme fog, Baowu can meet the iron ore demand of downstream steel mills by coordinating port inventory in advance, thereby reducing the risk of raw material supply disruptions for steel enterprises in the region.
HBIS Group has also adopted an intelligent ore blending platform. Leveraging its strategic position at Tangshan port, the company has built China's first cross-regional smart blending facility for iron ore. The platform enables precise mixing of Australian, Brazilian and domestic ores in dynamic proportions, keeping the fluctuation of the furnace feed grade within 0.3 percent, while also reducing overall iron ore costs.
Moreover, Shagang Group - China's leading electric arc furnace (EAF)-based steel producer located in East China's Jiangsu Province - has established 12 scrap processing centers in the Yangtze River Delta, backed by long-term agreements with vehicle dismantling companies and building demolition firms. This strategic move has ensured stable scrap deliveries to Shagang even during nationwide supply shortages and has supported its high EAF operating rates.
In 2025, domestic short-process steel mills experienced a serious scrap shortage. Nearly 40 percent of independent EAF-based steelmakers were forced to suspend production due to disrupted scrap supplies. In contrast, Shagang Group maintained a stable scrap self-sufficiency rate of 78 percent, with its EAF capacity utilization rate consistently staying above 90 percent. The company was even able to allocate surplus scrap supplies to surrounding small and medium-sized steel mills, helping to curb the irrational surge in regional scrap prices.
Quantitative assessment of raw material security is equally important. Steel companies can establish evaluation systems that measure overall competitiveness alongside product-specific performance, covering both management capabilities and operational execution. This allows steelmakers to benchmark against peers and identify areas for improvement, CMN argues in its report.
More importantly, steelmakers need to reduce raw material procurement costs through multiple channels. Steelmakers can bring new and competitive suppliers to boost market competition, while multi-site groups or regional companies may consolidate their purchasing needs to strengthen bargaining power and adjust procurement rhythms flexibly with lean inventories to hedge against price volatility, according to the report.
In addition, the steelmakers should pay more attention to raw material and fuel project investments. Top management needs to prioritize mining investments, assign dedicated teams to track opportunities, and make timely recommendations. Before investing, do thorough due diligence by using third-party experts to avoid risks from bad timing or poor assessment, CMN recommends, adding that, for those new to mining, they should consider equity stakes or joint investment groups to share risks and rewards.
