China: Steel exports surge 22% y-o-y in CY'24 amid soft domestic demand

• Sluggish domestic demand pushes mills towards exports
  
  
• Exporters' aggressive pricing tactics help boost volumes
  
  

China's steel exports rose 22.7% y-o-y in CY'24 to 110.71 million tonnes (mnt) against 90.26 mnt in CY'23, as per the General Administration of Customs. In December 2024, exports increased by 25.9% y-o-y to 9.72 mnt compared to 7.73 mnt in the year-ago period.

Additionally, export volumes edged up by 5% m-o-m from 9.27 mnt in November 2024.

Highlights

1. Exporters adopt aggressive pricing strategies: Significantly cheaper export offers from China compared to other nations resulted in its higher export volumes. For instance, China's hot-rolled coil (HRC) export offers remained very competitive at $486/t FOB in December 2024, while Japanese ones were at $505/t FOB.

Notably, for a large period in CY'24, Indian mills did not actively offer material, as they could not match China's aggressively priced offers and, so, found very few takers for their material. Instead, domestic demand took precedence over exports.

However, even then, India faced significant challenges due to a substantial volume of Chinese steel imports, driven by their competitive pricing. Eventually, towards the end of the year, import volumes declined, with the expiration of BIS licences and ongoing trade investigations reducing the availability of Chinese steel in India.

2. Domestic market sees sluggish demand: China's steel demand weakened in CY'24 due to a struggling real estate sector and broader economic instability. Despite this drop in domestic demand, steel production remained relatively steady, resulting in oversupply. This forced suppliers to significantly increase their exports to recover costs. Additionally, the slowdown in China's overall economic growth also impacted infrastructure projects and manufacturing, further reducing steel demand.

Outlook

China's steel exports are expected to remain strong in the near term, driven by competitive pricing and robust demand from key markets. However, the long-term outlook is uncertain due to China's slowing domestic demand and economic instability. As the Chinese government implements policies to stimulate economic growth and stabilise the real estate sector, domestic steel demand may recover, potentially impacting export volumes.