Growth in Chinese exports leads to a drop in global steel prices

The growth of Chinese exports is leading to a drop in global steel prices, and overproduction in China continues. This is reported by Nikkei Asia.

According to major steel companies, prices for hot-rolled coils in the Southeast Asian market fell sharply from around $700-900/t (including freight) in 2021 to mid-2022 to a range of around $510-520/t due to increased exports from China.

The last time China’s exports of steel products increased sharply, it led to the creation of the Global Forum on Steel Overcapacity (GFSEC) in 2016.

In 2019, China withdrew from the GFSEC, announcing that it had fulfilled its mission. Since then, the country’s production capacity, which had been falling from 2016 to 2018, has started to grow again.

Of particular concern to steel companies in developed countries is the growing share of high-quality flat products in Chinese exports. In 2023, exports of these products grew by more than 40% to just over 20 million tons, and in 5 months of 2024 they have already reached almost 12 million tons.

The number of anti-dumping investigations worldwide has increased from five in 2023, three of which involved Chinese goods, to 14 initiated in 2024 (as of early July), ten of which involved China. This is still low compared to the 39 cases in 2015 and 2016. Some observers say that developing countries that depend on China do not want to irritate China with such moves.

China’s overcapacity and excessive steel exports are putting significant pressure on the steel industry in various countries, including India. This is stated in the Indian Economic Outlook for 2023-2024, Kallanish reports.

China’s strong production capacity build-up poses a threat to emerging markets and developing economies. As noted in the report, estimates show that China’s steel exports will grow again – by 27% in 2024 after a 35% increase last year.

The study also notes India’s status as a net importer of rolled steel in FY2023/2024 (ended March 2024). Over the past ten years, the country has been a net exporter of this steel product. The reason for this change is the price difference between international and domestic prices for rolled steel.

In January-June 2024, China’s steel companies increased steel exports by 24% compared to the same period in 2023, to 53.4 million tons.

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Published by
Masha Malonog
Tags: China steel export надлишкові потужності
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