China’s Steel Exports Surge

China’s steel product exports have increased significantly this year due to weak domestic demand, particularly in the slumping real estate development sector. Meanwhile, aluminum product exports have declined due to increased activity in the manufacturing and energy industries.

China accounts for over half of the world’s steel and aluminum production. To control excess capacity, the Chinese government has set informal production caps, which both industries are likely to hit. Steel production has been informally limited to last year’s level of 1.005 billion metric tons. Given that output in the first ten months of this year was 817.87 million tons, full-year 2025 production is expected to fall below 1 billion tons for the first time since 2019.

The persistent downturn in the real estate construction sector is seen as the main reason for weak steel demand, prompting steel mills to compensate by boosting exports. Customs data released on Monday showed that China’s steel product exports rose 6.7% year-on-year to 107.72 million tons in the first eleven months of this year. If December’s exports are in line with this year’s monthly average, full-year steel exports will reach approximately 117 million tons, a record high surpassing the 2015 peak of 112.39 million tons.

For steel mills, exporting is currently more economically viable. Domestic steel prices hover near five-year lows. On Monday, the main rebar contract on the Shanghai Futures Exchange settled at 3,128 yuan per ton (approximately $442.43), remaining range-bound after hitting a low of 3,012 yuan in early June. Chinese steel is price-competitive internationally; last week, the settlement price for the Turkish rebar contract on the London Metal Exchange was $560.50 per ton.

Despite many countries imposing tariffs on imported steel to protect domestic producers, China has successfully expanded its steel exports. Notably, most Chinese steel is exported to other Asian countries, especially those with limited domestic steel capacity, where purchasing cheaper Chinese steel aligns with their economic interests.