Diversify Export Markets to Mitigate Risks and Enhance the International Competitiveness of Chinese Steel

Vice President of Shanghai Steel Union, Ren Zhuxian, Suggests:

Diversify Export Markets to Mitigate Risks and Enhance the International Competitiveness of Chinese Steel

"In recent years, the global steel production landscape has undergone subtle changes, with the focus gradually shifting toward emerging markets. I suggest that Chinese steel enterprises actively explore emerging and developing markets to reduce dependence on single markets, diversify export markets to mitigate risks, and enhance the international competitiveness of Chinese steel products." This was highlighted by Ren Zhuxian, Vice President of Shanghai Steel Union, at the Steel Industry Internationalization Development Seminar held in Xiamen, Fujian, on December 3rd.

Emerging Markets “Growing” Faster

Global Steel Industry Concentration Increasing

Ren Zhuxian pointed out that, over the past years, the global steel trade market has shown a trend of accelerating growth in emerging markets. These markets have exhibited strong growth momentum, while the concentration of the global steel industry has increased, with large enterprises becoming more prominent.

According to statistics from the World Steel Association, from January to September 2024, China’s crude steel production declined by 4% year-on-year; in contrast, India and Turkey saw growths of 5% and 12%, respectively, reflecting their active development in steel production. Russia’s production also showed a slight increase of 6% year-on-year, while Japan and South Korea experienced notable declines in production. Traditional steel-producing countries like the United States and Germany maintained relatively stable production. "In contrast to the past, Brazil has seen rapid growth in production due to the economic growth in South America," she explained. "In 2023, of the world’s top 20 steel companies, those from Asia, including China, Japan, and India, made up a significant portion. Moreover, the total production of these top 20 companies reached 741 million tons, a 15.57% increase from 2013. Among them, China Baowu Steel, which ranked low in 2013, became the leader in 2023, with a production volume of approximately 130 million tons, indicating that leading enterprises are gradually upgrading their scale through mergers and capacity expansions, thus raising market concentration."

Over the past 10 years, the global steel import and export patterns have also been adjusted. "Looking at import data, some European countries have shown a significant increase in import volume," she said. "In the past 10 years, global imports grew by 9.3%, with Asia, Europe, and North America being the main regions for global steel imports. In 2023, these regions accounted for 73% of global imports. The regions with the largest import growth were North America, the Middle East, and Africa. Countries like Mexico, the Netherlands, Poland, Vietnam, Turkey, Italy, and Belgium saw significant increases in imports by 115.6%, 46.48%, 45.13%, 40.69%, 24.46%, 19.67%, and 14.75%, respectively, while imports from the CIS and South Korea showed notable declines."

"Regarding export data, major European countries, as well as Japan and South Korea, saw a clear downward trend in exports, while regions such as the Middle East and Africa saw a significant acceleration in exports," Ren Zhuxian added. "In 2023, global steel exports totaled 434 million tons, a 5.3% increase from 2013. The proportion of exports from Asia, South America, the Middle East, and Africa increased, while the export volume and share of the European Union showed a downward trend."

New Trends in International Trade

Emerging Economies Support Global Steel Consumption Growth

Ren Zhuxian stated that international trade flows have shown new trends in recent years, notably in two key areas: first, the strengthening of trade links between China and countries along the Belt and Road Initiative, and second, the frequent import activities between the United States and members of the North American Free Trade Agreement.

"Japan and South Korea mainly export large quantities of steel to Southeast Asia to meet the growing demand in the region’s construction industry and other steel-consuming sectors. Trade cooperation on high-value-added steel products between China, Japan, and South Korea has also intensified. Steel demand in European countries and the United States is gradually recovering, particularly in infrastructure and manufacturing sectors, where high-quality steel products are mainly imported from countries like Turkey. However, the United States still imposes trade restrictions on some Chinese steel products, leading to more imports from Mexico and Canada. Steel imports in South America have significantly increased due to economic recovery, with Brazil supplying steel not only to its local market but also exporting to neighboring countries. The overall South American region remains a net importer of steel, primarily from Asia and Europe," she added.

"Currently, the majority of global steel consumption growth comes from emerging markets. The reason for the continued global increase in steel consumption is the sustained economic growth of emerging economies. These emerging economies need large quantities of steel for infrastructure and urbanization projects," Ren Zhuxian explained. According to the 2024 Global Steel Statistics, countries like India have significantly increased their share of global steel consumption, while the share of regions like the European Union and North America has declined. Emerging economies like China play a crucial role in supporting the global growth of steel consumption.

Global Economy Remains Resilient

Steel Demand in Certain Regions Will Gradually Increase

The International Monetary Fund (IMF) released its World Economic Outlook report on October 22, noting that, despite ongoing price pressures in some countries, the global "battle against inflation" has been largely won. The overall inflation rate peaked at 9.4% (year-on-year) in the third quarter of 2022, and is expected to drop to 3.5% by the end of next year. The Organization for Economic Cooperation and Development (OECD) also released an Economic Outlook report, which predicts global economic resilience, with an expected growth of 3.3% in 2025, a slight increase from the 3.2% projected for 2024, and continued growth at 3.3% in 2026, accompanied by further reductions in inflation levels.

In this context, how will global steel demand change? "Demand from emerging and developing economies will gradually increase, and steel demand in regions like Africa and the Middle East will continue to rise steadily," Ren Zhuxian stated. According to a forecast report by the World Steel Association released in October, global steel demand is expected to decline by 0.9% to 1.751 billion tons in 2024. After three years of decline, global steel demand is expected to rebound by 1.2% to 1.772 billion tons in 2025. Steel demand in Brazil and Mexico is expected to increase in 2024, with Brazil's steel demand potentially growing by 5%.

"Among the ASEAN-6 countries, Indonesia, the largest economy in Southeast Asia, currently has the highest GDP. Although Indonesia and the Philippines rank last in per capita steel consumption, their consumption is still on the rise. There is a certain correlation between GDP and per capita crude steel consumption, especially in more economically developed countries. However, this correlation is also influenced by factors such as industrialization, infrastructure development, and economic structure. Overall, Southeast Asia's steel industry is relatively underdeveloped due to its late start. The current per capita crude steel consumption remains low, indicating a significant potential for future consumption growth," she explained.

Ren Zhuxian believes that future steel consumption will be driven by key projects planned in various regions globally. For example, the Vietnamese government is currently promoting the construction of a high-speed railway from north to south, and Singapore's government is pushing the 2025 city planning blueprint.

"The economy in regions along the Belt and Road, as well as in the CIS, is steadily growing, and infrastructure investments are driving steel demand. Countries in these regions have seen stable GDP growth, with Turkey experiencing significant growth since 2009, and strong increases in GDP post-2020. Saudi Arabia, Turkey, and Russia’s per capita crude steel consumption has fluctuated over the past 20 years, while the UAE has seen a decline from earlier peaks, stabilizing in recent years. Overall, countries in this region have been promoting investment in infrastructure and construction, which is expected to continue driving steel consumption," she noted.

Trade Frictions May Become Major Challenges

Suggestions to Meet International High-End Product Demand

Although global inflationary pressures have decreased this year, global trade is showing signs of recovery, yet it still faces structural challenges. Geopolitical conflicts and the increasing number of trade restrictions imposed by various countries could create pressure and risks for the recovery of global trade, leading to fragmentation in international trade.

In response, Ren Zhuxian pointed out that trade frictions in the steel import and export markets have intensified in the past year and may become the primary challenge for China’s steel exports in the future. According to statistics, in the first 10 months of this year, there were 24 anti-dumping cases (accounting for 85.71%) and 3 countervailing measures (accounting for 10.71%) initiated against China's steel industry. "On one hand, global trade barriers are rising, with many countries imposing high anti-dumping duties (e.g., Canada’s highest rate of 46.2%) and long-term safeguard measures (e.g., the UK’s measures lasting until 2026); on the other hand, tax policies are becoming more refined, with differentiated policies for different product types, such as Turkey imposing 15% duties on non-alloy steel and 13% on alloy steel, and Brazil applying fixed-amount duties. These 'targeted protection' measures set higher requirements for China's steel exports," she said.

"At the same time, the development of the global carbon market will significantly affect international steel trade activities," Ren Zhuxian explained. The European Union plans to officially impose a "carbon border adjustment mechanism" starting in 2026, which will likely create new challenges for the global steel market, including Chinese steel products.

In addition, Chinese steel enterprises should optimize their trade strategies, innovate in steel product types, and focus on high-end products such as high-performance and high-precision steel. "We should not only focus on high-end manufacturing and high-tech industries but also expand production capacity for premium steel products that meet international standards, especially high-grade products in the aerospace, automotive, and electrical appliance industries," she suggested.

To further enhance international competitiveness, Ren Zhuxian suggested that Chinese steel enterprises actively explore emerging markets such as Africa and the Middle East, diversify export destinations, and deepen collaboration with international customers. "In particular, China’s efforts in areas such as the Belt and Road Initiative, as well as investment in high-end production capabilities, are crucial to adapting to changes in global demand," she concluded.