Key Takeaways:
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- Chinese steel exports are forecast to decline by 3% in 2025 and by a third in 2026, driven by mounting trade barriers and falling domestic production.
- Domestic steel output is expected to drop 2% in 2025 and 3% in 2026, reaching 946 million tons—over 10% below its 2020 peak.
- Domestic steel consumption is projected to fall 2% in 2025, marking the fifth consecutive year of decline, as weak demand from the property sector offsets growth in manufactured goods.
- China’s outsized share of global steel production is expected to shrink, though indirect steel exports in appliances and machinery could mitigate the impact.
What Happened?
Goldman Sachs has forecast a significant decline in Chinese steel exports and production over the next two years. Exports, which hit a nine-year high of 111 million tons in 2024, are expected to moderate by 3% in 2025 and drop by 33% in 2026. The decline is attributed to a growing number of anti-dumping investigations globally and weaker domestic production.
China’s steel output is projected to fall naturally due to reduced domestic demand and export challenges, eliminating the need for government-mandated production cuts. Domestic consumption is also expected to decline for the fifth consecutive year, driven by a continued slump in the property sector and insufficient growth in manufactured goods.
Why It Matters?
China’s steel industry, which accounts for a significant share of global production, is facing mounting challenges that could reshape global steel markets. The decline in Chinese exports may reduce competition for steel producers in other countries, but it could also lead to increased indirect exports of steel embedded in appliances and machinery, potentially offsetting some of the impact.
For global markets, the reduction in Chinese steel output and exports could stabilize prices, particularly as steel rebar futures in Shanghai and iron ore contracts in Singapore have already shown declines. However, the broader implications for industries reliant on Chinese steel, such as construction and manufacturing, remain uncertain.
The slowdown in China’s steel sector also reflects broader economic challenges, including weak property demand and trade tensions, which could have ripple effects across other industries and global supply chains.
What’s Next?
China’s steel production and export trends will be closely monitored, particularly as trade barriers and anti-dumping measures continue to rise. The global steel market will need to adapt to reduced Chinese output, with potential opportunities for producers in other regions to fill the gap.
Investors should watch for further developments in China’s property sector and manufacturing output, as these will play a critical role in shaping domestic steel demand. Additionally, the impact of indirect steel exports on global markets will be a key area of focus.
