China’s steel exports surge amid domestic decline

China’s steel exports have surged to record highs, as the world’s largest producer seeks to offload its growing surplus of steel amidst a domestic decline in demand, Bloomberg highlights.

As the world’s largest producer of steel, China is relying heavily on foreign markets to absorb the surplus created by its ongoing property crisis. However, this strategy is stirring up tensions, with accusations of dumping from importing countries and the looming threat of a protectionist agenda under a potential second term for Donald Trump. The situation is starting to resemble the steel industry’s last major trade conflict nearly a decade ago.

If China’s government doesn’t alter its current approach—such as by reigniting the housing market or ramping up infrastructure spending—domestic steel consumption will continue its long-term decline. However, steel mills have been slow to cut production, leading to record-high exports. In fact, over 11 million tons of steel were shipped last month, the highest volume in nine years. Investors are concerned that Trump’s re-election could trigger a new trade war. Even though China doesn’t directly export much steel to the US, rising protectionism could have a ripple effect across global steel markets and disrupt international trade. 

Analysts at ANZ Group Holdings suggest that Chinese mills may attempt to “front-run” potential tariffs by ramping up exports in the coming months. Historically, China’s steel exports have been a source of trade friction. According to China’s commerce ministry, importing countries have initiated 25 anti-dumping investigations this year, the highest number since 2016. If past trends hold, expect a sharp decline in sales moving forward.

“China’s steel exports may start to decline by the end of 2026 as more trading partners impose anti-dumping export controls and total steel production falls,” said Bloomberg Intelligence analyst Michelle Leung. China’s steel exports are primarily directed toward developing economies in Southeast Asia, South Asia, and the Middle East, many of which are involved in Beijing’s Belt and Road Initiative. However, even these countries are beginning to raise trade barriers in response to the flood of Chinese steel.

This signals trouble for Chinese steelmakers, as it indicates that the market is becoming increasingly saturated. Furthermore, if Chinese mills are forced to send their products further abroad, the cost of shipping will rise. A key example of this is China’s largest overseas market: “When Chinese hot-rolled coil exporters look out at the world, they don’t worry about Trump much, they worry about Vietnam,” said Tomas Gutierrez, an analyst at Kallanish Commodities. Vietnam, one of the countries that has been overwhelmed by Chinese steel, has responded by boosting its own exports to clear the metal stockpiles, exacerbating the global oversupply. Other neighboring countries are also feeling the pressure. 

Exports from Japan and South Korea have stagnated due to the competition from Chinese steel, and both countries are facing challenges in their own domestic markets. Japan is seeking to expand its anti-dumping measures to target Chinese steel being rerouted through third countries, while South Korea has launched an investigation into stainless steel plate imports amid complaints that Chinese-made products are being sold below market value.

By Naila Huseynova