China’s steel exports expected to falter in 2025 as pain from tariffs

China’s steel exports will soon hit an eight-year high, before sweeping tariffs sink in and drag down the industry in 2025, industry watchers said.

As the biggest exporter of steel, China accounts for about 55% of the world’s steel production. The country’s steel exports have been surging this year and are expected to smash through the 100 million metric ton mark, matching levels last seen in 2016.

Strategists at Macquarie Group predicted that China’s steel exports will reach 109 million tons this year, before declining to 96 million tons in 2025. Trade tariffs could further curb China’s steel exports, “albeit this may require a while to play out.”

Their predictions were echoed by analysts interviewed by Citigroup. China’s steel shipment is “skewed to the downside” from next year and onwards due to anti-dumping measures, Ren Zhuqian, an analyst from steel consultancy Mysteel, said in a Citigroup note this month.

Foreign markets have been particularly crucial amid a domestic supply glut, as China’s economy grapples with a prolonged property crisis and slowdown in manufacturing activities.

In September, China’s steel exports jumped 26% from a year ago to 10.2 million tons, surpassing the 10 million ton a month benchmark that was last hit in June 2016. In the first nine months of the year, exports rose 21.2% year on year to 80.7 million tons, according to the customs data last week.

After hitting a record high of 112 million tons in 2015, the country’s steel exports had been on a multi-year slide before it started improving in 2020.

Steel export growth has accelerated ever since, propelled by a lack of domestic demand, even as overall export growth in China slowed sharply in September on the back of a series of disappointing data that pointed to a weak economy.

Floods of cheap steel from China had sparked concern among its trading partners of unfair competition for domestic steelmakers. More and more have ramped up anti-dumping measures, including hefty tariffs.

Steel producers in importing countries have been “under massive strain,” said Chim Lee, senior analyst at the Economist Intelligence Unit, especially those in Southeast Asia and the Middle East.

Thailand expanded anti-dumping duties to 31% on hot-rolled coil, high-strength steel used for critical infrastructure construction, from China in August. Mexico imposed a nearly 80% tariff on some Chinese steel imports late last year.

This month, Brazilian government imposed a 25% tariff on all steel products from the country. And Canada’s 25% surtax on Chinese steel products, which it announced in August, came into effect on Tuesday.

These kinds of protectionism measures tend to have short-lived impacts, said Tomas…