Chinese steel exports to hit eight-year high in 2024 – FT

Chinese steel exports this year will reach an eight-year high, which may increase tensions in global trade. It is reported by the Financial Times.

According to the consulting company Mysteel, it is expected that exports from China in 2024 will exceed 100 million tons, which is the highest figure since 2016.

The fall in domestic demand in the country forced manufacturers to resort to increasing exports, mainly to the countries of Southeast Asia and increasingly to Europe.

China has flooded the world with steel and is pushing prices down, according to Ian Roper, commodities strategist at consultancy Astris Advisory Japan. He expects that other countries will take retaliatory measures to protect local metallurgists, and in the coming months more and more trade cases will be brought against the PRC. This could lead to higher duties on Chinese steel. Some states have launched new investigations, others have already raised tariffs on metal products from China this year.

The China Metallurgical Association (CISA), which represents the country’s major state-owned factories, recently called on steel producers to stop fierce competition and accused them of «relying on price wars to grab market share.»

The slowdown in construction and economic activity in the country led to a sharp drop in domestic demand. However, steel enterprises are in no hurry to reduce production, which led to an oversupply. As a result, the Ministry of Industry and Information Technology suspended the issuance of permits for the construction of new metallurgical plants.

Shipments of Chinese steel to Europe are also expected to increase in the coming months, and this is especially true of the hot-rolled steel. Although Chinese steel is subject to high tariffs of at least 18.1% in the European market, domestic HRC prices in China have recently fallen to levels where they have become competitive in Europe, even with additional tariffs.

Daniel Hynes, senior commodities strategist at ANZ Research, the research arm of the Australian bank, points out that Chinese steel producers, which typically export 7-10% of their total output, have benefited this year from relatively strong demand in Europe and Asia. In particular, Chinese metallurgists contribute to the fact that their competitors in some of these regions, for example, in Europe, suffer from higher energy prices. The analyst also added that there have been some signs of softening global demand in recent months.

Baowu Steel Group, the world’s largest steel producer, warned in August that the steel sector faces a serious crisis that will be worse than the previous 2008 and 2015. According to official figures, in the first seven months of this year, Chinese metallurgical plants suffered losses of 2.8 billion yuan ($390 million). According to Mysteel, only 1% of the country’s steel mills are profitable.

As GMK Center reported earlier, steel companies of China in January-July 2024 increased steel exports by 21.8% compared to the same period in 2023 – up to 61.23 million tons.