China exported its highest amount of steel in eight years in September as the industry grapples with overcapacity due to a property downturn and weak domestic demand, raising concerns that the surge in steel exports could exacerbate global trade tensions.
According to customs data, China's steel exports in September reached 10.15 million tons, up 25.9% year-on-year, the highest level since June 2016. However, the value of steel exports decreased by 11.62% year-on-year. Meanwhile, in the first 8 months of 2024, China exported 66.818 million tons of steel, up 31.8% year-on-year, but the total export value decreased by 10.7%.
China, which produces more than half of the world's steel, consumes it mainly in sectors such as construction, infrastructure, machinery and automobiles. However, the construction industry, which accounts for 35% of domestic steel consumption, has been hit hard by the prolonged real estate crisis. As of August, the number of new homes built fell 22.5% year-on-year, slowing construction activity and forcing steelmakers to look abroad.
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China's steel exports hit an eight-year high in September as domestic demand slumped, raising the risk of international trade tensions - (Illustration photo) |
In the first eight months of 2024, China's largest steel export markets were Vietnam (accounting for 10.25% of total exports), South Korea (8.71%) and Indonesia (5.25%).
"The main problem is overcapacity and competition between cheap steel and high-quality steel," said Yan Liang, an economist at Willamette University in the US. He said the Chinese steel industry is facing a structural problem of supply and demand, with demand from the housing sector falling while production continues to increase. China's move to increase steel exports could increase trade tensions with many countries.
China has faced 28 steel-related trade investigations this year from 12 economies, including the European Union, the United States, Brazil, Vietnam and Malaysia. That’s up from just two last year, both initiated by the United States. The investigations largely focus on China exporting excess steel to international markets, putting pressure on steelmakers in other countries.
Despite China’s steel output curbs in 2016, production continued to rise due to rising industry profits, until capacity cuts were reintroduced in 2020. However, losses were widespread. As of September 6, 95.7% of 247 steel companies surveyed in China were operating at a loss, according to Mysteel.
The China Iron and Steel Association recently held a meeting to address the problem of excess capacity, emphasizing the need to eliminate “zombie capacity” – inefficient businesses that survive on government subsidies. It also called for mergers and divestments of weak businesses to improve production efficiency.
China’s steel exports are forecast to hit 100 million tonnes this year, an eight-year high. However, with excess steel exports on the rise, the risk of international trade investigations is also growing.
China’s steel industry is at a critical juncture as it faces pressure from both domestic and international sources. While increased exports may be a temporary solution to overcapacity, in the long term the industry will need to restructure to ensure sustainability and mitigate the risks of trade investigations.
https://www.scmp.com/economy/article/3282751/chinas-steel-export-surge-prompts-concerns-it-could-add-trade-tensions
Source: https://congthuong.vn/xuat-khau-thep-trung-quoc-tang-manh-doi-mat-nguy-co-dieu-tra-thuong-mai-353245.html
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