While U.S. President Joe Biden’s proposal to triple tariffs on Chinese steel imports has garnered attention, China’s steel sector is grappling with more pressing concerns related to dwindling local demand and potential repercussions against its soaring exports.
Amid a prolonged property crisis and a slowdown in infrastructure demand growth following directives for 12 indebted regions to suspend certain projects, steel consumption in China, the world’s second-largest economy, is expected to contract this year. The China Metallurgical Industry Planning and Research Institute (MPI) forecasts a 1.7% decline in steel demand for 2024, following a 3.3% drop in 2023.
Despite a notable surge in China’s steel exports last year to their highest level since 2016, with a significant portion directed to countries other than the United States, the impact of Biden’s proposed tariff hike is expected to be mitigated. The main destinations for China’s steel exports include Japan, South Korea, and Middle Eastern countries, thereby softening the potential impact of the tariff increase.
Driven by competitive local prices, Chinese steelmakers and traders are on track to match or surpass last year’s exports, with domestic information provider Lange Steel revising its 2024 forecast to over 100 million tons following strong March shipments.
Furthermore, China’s inexpensive steel products have triggered concerns beyond the United States, leading to anti-dumping duties imposed by India, a significant tariff announced by Mexico, a probe launched by Thailand, and calls from Brazilian steelmakers for their government to impose a 25% tariff on imports.
Notably, a report from a Chinese state-backed research agency highlighted a substantial increase in the number of countries issuing statements regarding anti-dumping and anti-subsidy measures on Chinese steel products in 2023, signaling a growing trend of trade frictions.