In September 2024, China's steel exports reached a remarkable 10.2 million metric tons, the highest monthly figure since 2016. This sharp increase in exports has raised concerns about potential trade tensions as China, the world’s largest steel producer, seeks to offload its surplus steel onto the global market. The surge in exports is primarily attributed to a sluggish domestic steel market, prompting traders to maximize overseas shipments in light of increased global demand and better pricing.
The latest trade data reveals that China’s year-to-date steel exports have soared to nearly 81 million metric tons, reflecting a 21% rise compared to the previous year. As domestic demand weakens, particularly in light of the ongoing downturn in China’s property sector, steel producers are pivoting to international markets. Analysts, including Wei Ying from China Industrial Futures Ltd., noted that "the export surge is due to really weak domestic demand and prices during September." As domestic prices fell, traders recognized a widening premium in international markets, prompting them to accelerate their export activities.
China’s steel exports have not only found favor in Asia but also in regions like Latin America and the Middle East. Vietnam stands out as the largest buyer, raising concerns within its borders, as it recently launched an investigation into the influx of Chinese steel products. This growing export activity has stirred trade complaints from various nations, reflecting the geopolitical implications of China’s steel strategy. Despite these complaints, Chinese customs officials downplayed the significance of rising exports, emphasizing that the majority of China’s steel production continues to serve its domestic market.
Interestingly, even as steel exports have surged, the dollar value of these exports decreased by 5% in the first nine months of 2024. This drop is mainly attributed to falling steel prices, which have impacted the overall value despite the increased volume shipped.
Domestic demand for steel in China is projected to decline by 3% this year, amounting to about 869 million metric tons. In contrast, the global market is expected to see a modest growth of 1.2%, reaching approximately 882 million metric tons, as countries like India, Southeast Asia, and the Middle East experience rising steel consumption. This divergence in demand highlights the challenges faced by Chinese producers as they navigate a shrinking domestic market while seeking new opportunities abroad.
In September 2024, China imported an impressive 104.13 million metric tons of iron ore, marking a 2.9% increase compared to the same month last year. This significant rise in imports highlights China's position as the world’s largest consumer of iron ore, crucial for steel production. According to data from the General Administration of Customs, this upward trend is part of a larger pattern, as total iron ore imports for the first three quarters of 2024 reached 918.87 million metric tons, a year-on-year increase of 4.9%.
In addition, China’s coal imports reached a record high of 47.6 million metric tons in September, driven by concerns over fuel availability during the colder months. This surge in coal imports represents a 12% increase year-to-date, demonstrating China’s ongoing reliance on traditional energy sources despite efforts to shift toward renewable energy. Meanwhile, iron ore imports also rose by 2.9% in September, with the country bringing in 104.13 million metric tons of this crucial steelmaking ingredient.
The implications of China’s increased steel exports are multifaceted, affecting not only local markets but also global trade dynamics. As countries react to the influx of Chinese steel, the potential for heightened trade tensions looms large, prompting discussions about tariffs and trade policies in various regions. With China's focus on expanding its steel market while addressing domestic challenges, the global steel landscape is poised for significant shifts in the coming months.
