Speaking at the second session of the 19th SteelOrbis Steel Conference “New Horizons in Steel Markets” held today, December 3, in İstanbul, Anastasiia Kononenko, head of market intelligence for Asia at SteelOrbis, gave a presentation on the effect of the crisis in China on the global flat steel markets and presented statistical information regarding the other Asian countries.
Ms. Kononenko started by sharing some statistics regarding steel consumption and production in China. In the first 10 months of this year, steel output in the country decreased by three percent, though the fall was not as obvious as it should be amid the absence of restriction measures by the government. Based on this information, the 23.3 percent surge seen in China’s steel exports in the January-October period this year is an obvious sign that there is a crisis in the country. Everything is linked to consumption, she said. In China, apparent crude steel consumption fell by 5.5 percent in the January-October period this year. The real estate sector’s share in apparent steel consumption dropped to 33 percent in 2024 from 17 percent in 2015. Currently, more than 50 percent of steel demand in China comes from the manufacturing sector, though the rise in manufacturing sector consumption is not enough to fully offset the fall in steel demand from the construction sector. That is why the fall in the real estate market is the main reason behind the current crisis in the Chinese steel industry. According to most analysts, China will have to digest its residential home inventories to overcome the crisis.
Meanwhile, Ms. Kononenko predicted that China’s steel exports, which are expected to reach 110 million mt this year, will drop to 95-100 million mt next year. This prediction depends on the results of the antidumping investigations on hot rolled coils (HRC), cold rolled coils (CRC) and hot dip galvanized coils (HDG) from China that are currently ongoing in a few of its very important trading partners. Moreover, the most important segment of China’s steel exports is hot rolled coil (HRC). Total HRC shipments of Chinese exporters reached about 4 million mt in October this year. Vietnam ranks first among buyers of HRC imports from China, with South Korea in second place, followed by the UAE, Saudi Arabia and Turkey. Ex-China HRC holds a 50 percent in Turkey’s import segment. In the CRC segment, Chinese exports increased by 25 percent year on year to 4.23 million mt in the first 10 months of the year. Apart from small countries where Chinese CRC exporters are mostly focused, Chinese sales to Taiwan and South Korea also increased due to the attractive prices, while the Middle East became the second most import sales destination in terms of CRC exports. Also, a 19 percent increase was seen in Chinese HDG exports in October this year. Ms. Kononenko added that the sharp declines in steel offer prices and also in iron ore prices allowed China to export aggressively.
Regarding other Asian countries, Ms. Kononenko indicated that Indian steel mills are increasing their production on back of domestic economic growth. In the January-October period, finished steel consumption in India rose by 10 percent year on year to 121 million mt. However, as opposed to China, India remained a net steel importer, with its exports falling by as much as 36 percent and its imports rising by 41 percent in the first half this year. This triggers a lot of worries, with India pledging to fight it with stricter quality control.
In the meantime, the ASEAN steel market stood out with its new flat steel capacities, though the market is facing overcapacity due to a slowdown in demand. The region’s steel exports reached 23 million mt in 2023, with semis and long products accounting for most of the volume. Yet, ASEAN mills are experiencing challenges in entering the flat steel export markets. The SteelOrbis official said she does not think that ASEAN mills will soon have a strong impact on the global flat steel market. Only Vietnamese steelmaker Hoa Phat, which is about to finish the construction of its new HRC plant, may enter the market in time. Others may wait for some improvement in demand in the region in the hope that China’s direct impact will ease later on.
Ultimately, Kononenko underlined that China will have to change both its production and consumption fundamentally to overcome its current crisis. Additionally, the share of the manufacturing sectors in demand will keep gradually rising. Yet, demand has already reached its peak and the market needs to adjust to stability, rather growing. Also, US president-elect Trump’s policies, global protective measures and ongoing wars all raise questions about the coming period.