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1. Advantages in Raw Material Costs:
   • Strong Self-sufficiency in Coking Coal: China is relatively rich in coking coal resources, with a high domestic self-sufficiency rate of about 90% for coking coal. This gives Chinese steel enterprises a cost advantage in coking coal procurement, as it reduces the transportation costs and price fluctuation risks of imported raw materials. Compared with some countries that rely on coking coal imports, China’s advantage in coking coal costs helps to lower the production costs of steel.
   • Scale Effect of Iron Ore Procurement: Although 85% of China’s iron ore needs to be imported, China is the world’s largest importer of iron ore. The huge procurement volume gives it certain bargaining power when negotiating with iron ore suppliers, enabling it to obtain relatively favorable procurement prices. Moreover, as domestic steel enterprises continue to strengthen cooperation with overseas mines and stabilize iron ore supply and prices through long-term agreements and other means, the raw material costs have also been reduced to some extent.
2. Production Scale Effect:
   • Huge Industrial Scale: China has a vast steel industry and is the world’s largest steel producer. Large-scale production enables enterprises to achieve economies of scale and reduce the production costs per unit of product. For example, in terms of equipment procurement, production process optimization, and energy utilization, large steel enterprises have stronger cost control capabilities, thus being able to produce steel at a lower price.
   • Industrial Cluster Effect: China’s steel industry has formed several large industrial clusters, such as Tangshan in Hebei Province and Zhangjiagang in Jiangsu Province. The close cooperation and competition among enterprises within the industrial cluster have promoted technological exchanges, resource sharing, and the improvement of logistics efficiency, further reducing production and transportation costs.
3. Technological Progress and Efficiency Improvement:
   • Technological Upgrading: Chinese steel enterprises are constantly carrying out technological innovation and upgrading, adopting advanced production processes and equipment to improve production efficiency and product quality. For example, new iron-making and steel-making technologies as well as automated production equipment have reduced labor costs and energy consumption, thus lowering the production costs of steel.
   • Improvement in Energy Utilization Efficiency: The steel production industry is a large energy-consuming industry. Chinese enterprises have improved energy utilization efficiency and reduced energy costs by improving energy management and adopting energy-saving technologies. This also helps to reduce the price of steel to some extent.
4. Advantage in Labor Costs: Compared with some developed countries, China’s labor cost is relatively low. Although the steel industry is a capital-intensive and technology-intensive industry, it still requires a large amount of labor in the production process, especially in the operation and maintenance of some production links. The lower labor cost gives Chinese steel a certain advantage in production costs.
5. Diversified Product Structure: China’s steel products are rich in variety, covering multiple varieties from ordinary construction steel to high-end special steel. Enterprises can flexibly adjust the structure of exported products according to the needs and price sensitivities of different markets, providing product combinations with price competitiveness. For example, in some price-sensitive markets, Chinese enterprises can export ordinary steel with lower costs; while in markets with higher requirements for quality and performance, they can also provide special steel with higher added value.
6. Policy Support: Government departments have introduced a series of policy measures, such as tax incentives and export tax rebates, to promote the development and transformation and upgrading of the steel industry. These policies have, to some extent, reduced the export costs of enterprises and enhanced the price competitiveness of China’s steel in the international market.