China’s Steel Export Hitting Record High in 8 Years
Introduction
In the first 10 months of 2024, China exported 91.89 million tons of steel, a year-on-year increase of 23.3%, which has exceeded the total export volume in 2023 and is the highest level since 2016. The average monthly export volume from January to October reached 9.2 million tons, and China's steel export volume is expected to reach 110 million tons by the end of 2024.
China Is The World's Largest Steel Producer And Exporter
According to the latest "World Steel Statistics 2024" released by the World Steel Association, the total export volume of global steel products in 2023 was 400 million tons, a year-on-year increase of 6.4%, and export volume accounted for 21% of global production. Judging from the ranking of global steel exports, China is the world's largest steel exporter, accounting for 23.4% of the total global steel trade, followed by Japan, with steel exports of 32.2 million tons, with South Korea (27 million tons) , EU (26 million tons), Germany (22.5 million tons) being the third to the fifth. At the same time, the top five countries and regions in global steel import volume in 2023 are the European Union (39.2 million tons), the United States (26.4 million tons), Germany and Italy (both 18.7 million tons), and Turkey (18 million tons).
China is the world's largest steel producer and exporter. Looking back at China's steel exports over the years, the long-term relationship between export volume and price trends shows an inverse relationship. In the price rising cycle, steel export volume declines (2016-2020) whereas in the price falling cycle, steel export volume rises (2021-2024).
As the world's largest crude steel producer, China's export volume fluctuates between 5% and 10% of its output, which means that more than 90% of its output is consumed domestically, so steel prices are dominated by domestic demand. Steel prices entering a downward cycle means that domestic demand weakens, which in turn drives exports to go up. But factors including short-term export profits, export structure and anti-dumping policies also affect steel export of China.
The last round of steel export growth cycle started in 2021, when the increase in China’s steel exports was largely due to surging overseas demand, while the growth in steel exports of China from 2022 to 2024 is primarily the result of declining domestic demand and falling prices.
Asia Is China’s Largest Steel Export Region
From the perspective of China’s steel export structure, in the first nine months of 2024, the proportion of various types largely making up China’s steel exports from high to low is hot coils (26%), coated plates (25%), rods and wires (14%), steel pipes (10%), medium and thick plates (9%), cold-rolled steel (8%) and section steel (6%).
Speaking of China's steel export categories in 2024, hot-rolled coil is not only the largest export category, but also the category with the largest growth rate. As of the end of September, hot-rolled coil exports were 20.6 million tons, accounting for 26% of total steel exports, a year-on-year increase of 4.6 million tons. The export volume of hot-rolled coils has continued to grow in recent years. On the other hand, the export volume shares of cold-rolled steel and coated plates have declined, with the export volume shares falling from 12% and 34% to 8% and 25% respectively.
Asia has always been China's largest steel export region, accounting for 70%, followed by Africa (accounting for 11%) and South America (accounting for 9%). The proportion of China's direct steel exports to developed countries is relatively low, with Europe accounting for 5% and North America accounting for 1%. The destination countries of China's steel exports are not really concentrated, with the top ten accounting for 34% of the total steel exports in China.
In the past two years, Vietnam has replaced South Korea as the country with the largest steel import volume in China. In 2024, Vietnam, the United Arab Emirates, Saudi Arabia, Indonesia and India are the top countries with the largest increase in steel imports from China. Judging from Vietnam's economic structure in recent years, industrial production and construction have grown at a relatively high rate. The driving force for economic growth mainly comes from its participation in the global supply chain and its assumption of part of China's manufacturing capacity.
Europe And The United States Are The World’s Largest Steel Import Regions
Although the proportion of China's direct steel exports to Europe and the United States is not high, Europe and the United States are the world's largest steel import regions, and the demand cycle in Europe and the United States has a greater impact on China's steel exports. South Korea and Vietnam, the two countries that have imported the largest amounts of Chinese steel over the years, are both export-oriented economies, and their final demand is considerably from Europe and the United States. China is the country with the largest manufacturing capacity in the world, and the United States is the world's largest importer. It is logical for China's steel exports to be in strong alignment with manufacturing cycle of the US.
China's Steel Export Trends Largely Depend On Changes In Supply and Demand In The Domestic Market
From the perspective of digesting production capacity, China's steel exports may continue to remain at high levels. Looking back at history, the domestic steel demand was primarily pushed by the rapidly growing real estate demand in China since 2000. However, China’s real estate investment volume has fallen by nearly 40% since its peak in 2021, leading to a plummeting steel demand in China. Although the current macro environment is in a broad fiscal and monetary policy cycle, the upward elasticity of steel demand for real estate and infrastructure is not expected to be large due to the pressure of local government debt, and the situation of steel overcapacity in China is difficult to change.
Anti-Dumping Policy Affects China’s Steel Export
In recent years, countries such as Turkey, Thailand, Brazil, and Vietnam have successively increased their import tax rates on Chinese steel products. In October 2023, Turkey made a final affirmative anti-dumping ruling on China-related hot-rolled coils and decided to impose anti-dumping duties of 15.42% to 43.31% on the CIF price of related Chinese products. In August 2024, Thailand increased the tax rate on some Chinese steel products, with the highest tax rate being 30.91%. In addition, Brazil just imposed temporary anti-dumping duties on Chinese tin-plated and chromium-plated coils and plates for no more than 6 months in October. Overall, the increase in anti-dumping policies has affected the pace of China's steel exports, but the long-term steel export trend mainly depends on changes in domestic supply and demand.
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