China’s steel exports may face significant pressure in the coming months due to increasing trade measures from global partners. Vietnam, the largest importer of Chinese steel, has initiated an anti-dumping investigation, joining countries like the US, Saudi Arabia, and Chile in addressing the surge in Chinese steel exports.

“If the results of Vietnam’s anti-dumping investigation are negative to China, future exports could face a lot of pressure,” said Wei Ying, an analyst at China Industrial Futures Ltd. Chinese steel exports to Vietnam nearly doubled in the first half of the year, accounting for 12% of total exports.

China exported over 53 million tons of steel in the first half of the year, the highest rate since 2016, though exports have slightly declined since March. Despite potential moderation, overseas sales are expected to remain high compared to historical standards. These exports are vital as domestic consumption struggles due to the ongoing property market crisis and reduced state infrastructure spending.

The July export figures are awaited, and the latest purchasing managers’ index for the steel industry indicates worsening domestic conditions. The index for new export orders, though slightly up, remains in contraction.

China’s steel market is oversupplied, with reinforcement bar prices hitting a seven-year low and hot-rolled coil prices near their lowest since 2020. The China Iron and Steel Association has urged for self-discipline in exports, citing the negative impact of commoditised goods on industry development. Allegations that steel mills evade taxes to reduce export prices have also surfaced.

“Steel mills need to survive because output remains elevated, and as long as the product is cheap enough, there will always be a home for it,” said He Jianhui, an analyst at SDIC Essence Futures Co.

China’s new standard for steel rebar, effective in September, may lead to a selloff of old-standard steel and pressure prices, according to Bloomberg Intelligence. Additionally, challenges in the lithium-ion battery supply chain and the lowest building commencements since 2009 further highlight the difficulties faced by China's industrial sectors.

Image source: Economic Times