1/6 China’s steel industry has become a stand-in for the overall economy, with growing supply facing declining domestic demand. According to the World Steel Association, China produces roughly 55% of all the steel produced in the world.
It produces nearly 80% more than the next nine biggest producers, which are, in order, India, Japan, the US, Russia, South Korea, Turkey, Germany, Brazil and Iran. The article quotes the VP of the China Iron and Steel Association saying: "The biggest problem now is how to achieve a dynamic balance between supply and demand." This will require some combination of a decline in production, which is bad for growth and unemployment in China, and an expansion in exports, which won't be easy for other steel producers and exporters.
So far exports have taken up much of the slack. The article notes an Oxford Economics report which measures China’s combined export volumes of iron and steel to be 80 per cent above pre-pandemic levels
Fitch says that China’s steel exports climbed by 36.2% in 2023, to 90.26 million metric tonnes, and by 30.7% in the first quarter of 2024, to 25.8 million metric tonnes. This accounted for only 5% of China's total output, suggesting it could grow a lot more
I suspect many steel producers will respond by protecting their steel industries, but this will be tougher for major steel exporters. After China, the largest steel exporters are Japan, South Korea, German, Turkey, Russia, Italy, Belgium, India and Brazil
...China is exporting deflation, cheaper prices will be good for consumers but tougher for domestic industries facing competition from cheaper Chinese imports.
