中钢协：前三季度钢铁行业运行态势严峻 归根结底还是“内卷式”竞争加剧、供需失衡

English version

What happened

The China Iron and Steel Association said at a briefing that in the first three quarters steel output, demand, exports and prices fell year on year while inventories and costs rose, attributing the tough industry conditions to intensifying "involution-style" competition and a supply-demand imbalance.

The economics

This illustrates how a supply-demand imbalance pushes prices down: demand falls while supply adjusts slowly, inventories build up and prices drop, while rising costs squeeze margins, showing that price reflects both demand and cost conditions. Students can draw a leftward shift in demand with relatively rigid supply and mark the inventory build-up.

Evaluation

However, the price fall cannot be attributed to demand alone; rising costs and excessive competition within the industry also matter, and short-run inventory adjustment differs from long-run capacity exit, with consumers gaining in the short term while industry profits suffer.

Practice question

Using the supply and demand model, explain why steel prices fell and evaluate the impact of "involution-style" competition on the steel industry.