China’s Steel Exports Surge Raises Concerns Over Trade Tensions

As China grapples with the fallout from a property downturn and weak domestic demand, steel exports have soared, reaching a staggering 10.15 million tonnes in September, marking a 25.9% year-on-year increase and the highest level since June 2016. However, this surge comes amidst significant challenges, including a decline in export prices by 11.62% year-on-year and an ongoing overcapacity crisis within the industry.

The prolonged crisis in China's real estate sector has significantly affected the construction industry's demand for steel, which historically consumed around 35% of the nation's steel production. New home starts plummeted by 22.5% year on year as of August, forcing steel manufacturers to look for alternative markets abroad.

• Top destinations for Chinese steel include Vietnam (10.25%), South Korea (8.71%), and Indonesia (5.25%).
• The recent surge in exports has attracted scrutiny, with 28 trade investigations initiated this year by countries including the United States and the European Union.
• China's steel production output has seen enormous growth, with a staggering 10 million tonnes expected in exports this year, raising alarms about potential trade frictions.

Chinese economists warn that the dual challenges of declining domestic demand and high export volumes could exacerbate trade tensions with global partners, leading to increased regulatory scrutiny. Analysts are advocating for regulatory measures to manage overcapacity and push for industry consolidation to address concerns about sustainability and competitiveness.