China no longer knows what to do with its steel. With domestic consumption at half-mast, linked to the real estate crisis and the closure of numerous construction sites, it can only maintain its gigantic production by massively exporting to the rest of the world. According to forecasts by the London-based firm Kallanish Commodities, exports They are expected to increase by 5.8% in 2024, reaching their highest level since 2016. Asia, the Middle East, Africa and Latin America are expected to absorb 12% of Chinese production in 2024 (compared with 6% in 2022).
For a country that produces half of the world’s steel, more than 900 million tonnes, these percentages translate into colossal volumes. This year, almost 100 million tonnes of steel will be sold worldwide, the equivalent of two thirds of European production.
This increase is added to that of electric vehicles, batteries, solar panels and wind turbines and is a result of the weakness of domestic demand in the Asian giant. “Chinese overproduction of steel has become a global problem”This is a cause for concern for Axel Eggert, director general of Eurofer, the association representing the interests of European steel companies.
“Chinese dumping”
Many countries are seeking to protect themselves by raising customs barriers. At the end of August, Canada announced a 25% surcharge on steel and aluminium from China, effective from 15 October. In retaliation, Beijing launched an anti-dumping investigation into Canadian rapeseed on Tuesday 3 September. Brazilian customs duties also rose to 25% in the spring. The world’s fourth-largest producer, Nippon Steel, requested similar measures from the Japanese government at the end of August. Vietnam, which saw its imports of Chinese steel double in a year, launched an anti-dumping investigation in June.
But an increase in customs duties is not always enough to limit the damage. In Chile, the Huachipato steelworks (2,700 employees) announced a month ago the suspension of its activities due to financial difficulties, despite the decision of the Chilean authorities to temporarily tax Chinese steel from 25% to 34%. A decision justified by “the intensification of Chinese dumping” which prevented it from maintaining competitive prices. In 2023, 10 million tons of Chinese steel will flood into Latin America, a jump of 44% compared to the previous year.
“Chinese overproduction is flowing all over the world, notes Tomas Gutierrez, an analyst at Kallanish Commodities, While during the last crisis in 2015, Southeast Asia absorbed almost all of it because its production was low. » However, the growth in Chinese exports is concentrated in the Middle East and Southeast Asia, where demand is more dynamic. “But they also affect Europe indirectly, because they flood third countries such as South Korea, Japan or Taiwan, which forces their manufacturers to sell their production to us.”Axel Eggert points out that Eurofer is demanding that Brussels increase customs duties, which will apply to all countries with overproduction.
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