Steel Industry in Crisis as ‘Low Cost’ Chinese, ‘Weak Yen’ Japanese Imports Flood Market

The Chinese steel industry is ramping up its exports of steel products to international markets as it strives to overcome domestic market challenges, including a slowdown in the real estate sector.

According to the Korea Iron & Steel Association on Sept. 12, China’s steel product exports for the first seven months of this year amounted to 51.925 million tons, which represents 78 percent of the previous year’s annual export volume of 66.577 million tons. The monthly average export volume for this year stands at 7.417 million tons, marking a significant increase of 33.7 percent compared to last year’s 5.548 million tons.

In particular, regions in close proximity to China, such as South Korea, Southeast Asia, and Africa, are becoming significant destinations for Chinese steel exports. In these five nearby regions alone – South Korea, Vietnam, Thailand, the Philippines, and Indonesia – the monthly average export volume of Chinese steel products this year has increased by 32.3 percent to 497,261 tons from 375,976 tons during the same period last year.

Various countries are accelerating the imposition of sanctions to protect their domestic steel industries against the onslaught of low-cost Chinese steel products.

On Sept. 11 (local time), it was announced that anti-dumping tariffs on Chinese steel would be imposed for five years. Chinese steel exports to India from April to July, coinciding with the commencement of India’s fiscal year, saw a substantial increase of 62 percent compared to the same period last year, totaling 600,000 tons.

Last month, Mexico unexpectedly increased its import steel tariffs by up to 25 percent for countries that have not entered into a free trade agreement (FTA). In the industry, there is a prevailing opinion that this move by Mexico is essentially targeting low-cost Chinese steel products.

It has been reported that the United States and the European Union (EU) are also considering the introduction of new tariffs targeting the overproduction of steel in certain countries, including China. They plan to work out the details, including tariff rates and the countries affected, through discussions by next month, particularly focusing on steel products that do not meet environmental standards such as carbon emissions.

The South Korean steel import market is also experiencing a significant influx of Chinese steel products, particularly in construction steel such as steel bars and wire rods. From January to July, the volume of Chinese steel imports into South Korea increased by 30 percent compared to the same period last year, reaching 5,274,372 tons.

There is also an analysis suggesting that protectionist steel policies in various countries are disrupting South Korea’s steel exports. Chinese steel is reportedly being exported through circumvention methods, such as processing in other countries, to bypass trade sanctions imposed by various nations in recent times.

In addition to this, there has also been a 6.1 percent increase in Japanese steel exports to South Korea due to the “weak yen effect” during the period. This presents a dual challenge for the domestic steel industry.