China’s steel exports are set to hit an eight-year high this year, flooding the world with cheap supplies and threatening to inflame global trade tensions.
The world’s largest steel producer is forecast to export more than 100 million tonnes in 2024, the highest since 2016, according to Shanghai-based consultancy MySteel, the Financial Times reported.
“Steel exports have reached historic levels so far this year,” said Vivian Yang, editor-in-chief of MySteel. She forecast total steel exports of 100-101 million tonnes for the year, the third highest on record.
Slumping domestic demand in China, which accounts for more than 50 percent of global steel production, has prompted producers to export more of the material, mostly to countries in Southeast Asia and increasingly to Europe.
“China has flooded the world with steel and pushed prices down,” said Ian Roper, a commodities strategist at Japanese consultancy Asteris Advisory. He predicted that countries would retaliate in an attempt to protect domestic steelmakers from competition from the world’s biggest producer. “More and more trade cases” will be filed against China in the coming months, he said.
The cases could lead to countries imposing higher tariffs on Chinese steel, which faces tariffs in many countries. A growing group of emerging market economies such as Mexico and Brazil have already raised tariffs this year, while others such as Vietnam and Turkey have launched new investigations.
The United States has doubled its tariffs on Chinese steel this year, while the European Union in May launched an anti-dumping investigation into Chinese tin-coated steel products. Canada announced new steel tariffs last week.
The China Iron and Steel Association, which represents the country’s major state-owned steel mills, urged steelmakers to end “fierce competition,” accusing them of “relying on price wars to grab market share.”
The association’s China steel price index fell to an eight-year low as of Aug. 16. In Europe, spot prices for hot-rolled coil have fallen by about a fifth since the start of the year.
A slowdown in Chinese construction and economic activity has dampened domestic demand, while steelmakers have been slow to curb output, leading to oversupply.
In a sign of Beijing’s concern over the issue, the Ministry of Industry and Information Technology suspended approvals for new steel mills in August.
Chinese steel shipments to Europe are also expected to rise in the coming months, especially for hot-rolled coils, which are used in products such as cars and machinery.
“We’re going to see a sharp rise in the coming months,” said Colin Richardson, head of steel at Argus Media, a commodity price data provider, adding that China’s exports of hot-rolled coil (steel subjected to high temperatures) have been on the rise over the past 12 months.
Even though Europe has a steep tariff of at least 18.1 percent on Chinese steel, domestic prices for hot-rolled coil in China have fallen recently as they become cost-competitive in Europe, even with the additional tariffs.
