In the first half of 2024, Chinese steelmakers experienced a notable increase in steel exports, rising by 24% compared to the same period in 2023, reaching a total of 53.4 million metric tons. This surge can be attributed to weak domestic consumption, prompting local producers to redirect their surplus steel to unprotected export markets. As the Chinese economy grapples with declining profits and a slowdown in demand, steel manufacturers are compelled to seek opportunities abroad, even as they encounter various challenges in the global market.
The rise in steel exports from China began in 2021 when local authorities ramped up support for the steel industry in response to the COVID-19 pandemic. During 2021 and 2022, exports remained stable at approximately 66-67 million metric tons annually, bolstered by consistent domestic demand from the construction sector. However, in 2023, a significant slowdown in construction activities led to a sharp decline in steel consumption, resulting in a 34% year-on-year increase in exports to 90.3 million metric tons.
Experts predict that in 2024, Chinese steel shipments overseas will continue to grow, projecting an increase of at least 27% year-on-year, potentially surpassing the record of 110 million metric tons set in 2015. This optimistic outlook reflects the ongoing efforts of major Chinese steel firms, such as Baowu Steel and Hebei Iron and Steel, to penetrate new markets and mitigate the effects of reduced domestic demand.
In the first five months of 2024, China exported 1.39 million metric tons of steel to the European Union, a decrease of 10.3% compared to the previous year. However, the volume remains significant, as Chinese products continue to flow into the EU market through other countries, including Egypt, India, Japan, and Vietnam.
As of April 2024, China's steel production capacity was estimated at 1.074 billion metric tons annually, slightly down from 1.112 billion metric tons in March 2023. In contrast, steel production in the first half of the year decreased by 1.1% year-on-year, totaling 530.57 million metric tons. This decline in production is less than the decrease in apparent consumption, which fell by 3.3% year-on-year to 480.79 million metric tons.
Despite the weak domestic demand, Chinese steelmakers are reluctant to cut production capacity, leading to excessive exports and a decline in steel prices. This situation poses serious challenges for steelmakers in various countries, particularly in the European Union, where local producers are struggling to compete with the influx of cheaper Chinese steel.
