Facing tariffs, China's steel industry grapples with international criticism and changing global demand.
China's steel export practices have come under intense scrutiny and criticism from multiple countries, including the United States, European Union, and India. Amidst these challenges, China's steel industry is grappling with balancing supply and demand, which has led to a decline in crude steel production.
According to reports, China's steel exports have surged to 90.26 million metric tons in 2023, marking the highest level since 2016. Despite this increase, exports to the United States ranked 7th, with just 598,000 tons shipped, a decline of over 8% from the previous year. This has caught the attention of President Joe Biden, who, during an election rally at the United Steelworkers union headquarters, called for the imposition of triple tariffs on Chinese steel imports. "We can't let China dump steel into our market like this," Biden stated, emphasizing the need for stronger protections for American steelworkers.
Other nations have also expressed discontent and taken measures against Chinese steel imports. India has initiated anti-dumping duties on certain Chinese steel products, while Mexico has imposed a substantial 80% tariff. Thailand has begun an investigation into Chinese rolled steel imports, and Brazil's steel producers are pushing for a 25% import tariff.
Despite the international uproar, China's steel production faces its own challenges. The World Steel Association forecasts a 1.7% increase in global steel demand to 1.793 billion tons this year. At the same time, China's output of crude steel fell in the first quarter of 2024, even as iron ore imports and domestic production increased. Reuters reported a 5.5% rise in iron ore imports during the first quarter, with a total of 310.13 million metric tons, and a 15.3% increase in local iron ore production.
In response to these challenges, China's National Development and Reform Commission (NDRC) has announced plans to regulate crude steel production, focusing on energy conservation and carbon emission reduction. The NDRC aims to issue guidance on crude steel output for steel mills later this year, following a comprehensive investigation into steel capacity.
The current situation reflects China's struggle with an oversupply of steel amidst slowing domestic demand and international pushback. Despite the United States' stance, the situation for China's major steel export markets, such as the Middle East and Japan, is likely to remain unchanged in the near term.
