As the world’s largest steel producer, China’s iron market significantly impacts global steel production and pricing. With China responsible for over half of the world’s steel output, changes within its domestic market reverberate worldwide. In 2024, several key factors are shaping how China’s iron market influences steel production across the globe.
Rising Exports Amid Declining Domestic Demand
China has recently increased its steel exports due to declining demand within its borders, largely a result of challenges in the property sector and a slowdown in infrastructure investments. For instance, China exported 53 million tons of steel in the first half of 2024, a 24% increase year-over-year. This surge in exports not only floods the global market with low-cost Chinese steel but also exerts downward pressure on prices in regions dependent on local or regional production, impacting profits for steelmakers outside China.
Pressure on Global Prices and Market Shares
With China’s increased output of cost-competitive steel products, international steel prices have dropped, affecting producers from Europe to North America. Competing against China’s low-cost exports, many non-Chinese steel producers face profit challenges as they adjust prices or explore export alternatives to stay competitive. For example, Southeast Asian countries have started expanding their own steel production capacities, aiming to reduce reliance on Chinese imports.
Future Outlook for China’s Steel Production and Exports
Industry analysts predict that China’s steel production may remain high but slightly lower than in 2023. Expected domestic demand declines due to a sluggish real estate market might push China to sustain high export levels to balance production costs. However, international competition is expected to increase, as new steel plants in Southeast Asia come online and alternative suppliers emerge.
In summary, China’s iron and steel industry’s influence on global production and pricing dynamics is expected to grow. With China’s domestic demand shifting and new production capacities developing worldwide, the global steel market may witness both volatility and opportunity in the coming years.
