China's steel exports likely to rise y-o-y in CY'25 despite US tariffs, trade barriers

• China steel exports climb up by 10% y-o-y in Jan-Aug'25
  
  
• Exports stay high in Aug but dip m-o-m on weak demand
  
  
• Govt's VAT evasion crackdown may prompt front-loading
  
  

Morning Brief: China's steel exports maintained their uptrend over January-August 2025 (8MCY'25), totalling 77.5 million tonnes (mnt). Volumes were higher by a strong 10%, buoyed by persistent domestic demand weakness.

Chinese steelmakers have been forced to offload goods overseas to alleviate the supply pressure in the domestic market. US-China tariff tensions have also driven aggressive front-loading, and expectations are that China will close the year with robust export growth y-o-y, reaching a new peak.

Volumes dip in Aug'25 amid weak demand, higher prices

On a monthly basis, August registered 9.5 mnt of steel exports, inching down by 3% m-o-m while inching up by a marginal 0.1% y-o-y. The decrease stemmed from weak demand from importing regions, while US tariff-driven uncertainties also reined in procurement.

Additionally, a sharp rally in Chinese steel prices in late-July-early-August also diverted focus to domestic sales. Momentum in export orders might also have softened during this period as well, given that Chinese steel, in particular, hot-rolled coils (HRCs), lost its price advantage to peers such as Russia and Japan.

Monthly average export offers of Chinese HRCs strengthened by $21/tonne (t) m-o-m to $485/t FOB in August, while Japan's increased by $23/t but to a lower $470/t FOB. Russia's offers rose slightly in comparison, by $5/t m-o-m to $453/t FOB. Indian offers were much higher at $510/t FOB to the Middle East and Southeast Asia and $554/t FOB to the EU.

Meanwhile, it is heard that Chinese exporters and overseas buyers were also concerned about the government's crackdown on VAT evasion, with tighter controls expected to take effect from 1 October. This could have also prompted some front-loading while also keeping certain other buyers cautious.

Region-wise steel exports in 8MCY'25

Overall, there have been some significant shifts in export flows, with several traditional markets adopting protectionist measures to safeguard their domestic industries. As such, Chinese exporters were compelled to redirect shipments to other geographies.

The Middle East and Africa emerged as the top destination for Chinese steel exports in January-August 2025, with a 19% y-o-y increase (24.2 mnt). In this region, the top destination was the UAE (3.76 mnt, +9%), which has witnessed strong construction momentum this year.

Next was Saudi Arabia (3.41 mnt), recording a 16% increase y-o-y. Notably, Saudi Arabia announced anti-dumping duties on imports of steel and stainless steel pipes from China for five years. Meanwhile, exports to Turkiye (2.67 mnt) dipped by 3% amid an anti-dumping duty.

Southeast Asia (22.0 mnt) experienced a marginal 1% uptick. Shipments to Vietnam (6.29 mnt), China's largest export destination, suffered a 21% y-o-y fall, following an anti-dumping duty imposed on flat-rolled imports.

Exports to Thailand (3.83 mnt), the Philippines (3.72 mnt), and Indonesia (3.13 mnt) witnessed modest growth in the range of 5-10%. Notably, the latter two have imposed import tariffs.

Central and South America (9.86 mnt) experienced a 25% increase in arrivals from China. Brazil (2.28 mnt) received the highest volume, but exports edged down by 4% y-o-y. In May 2025, Brazil had renewed last year's safeguard measures on steel imports, with a 25% tariff imposed on 23 types of products. Other protectionist measures are also being mulled or have been implemented.

Peru (1.53 mnt) and Chile (1.21 mnt) also saw double-digit growth of 36% and 34% y-o-y.

Exports to East Asia (8.59 mnt) dropped 5% y-o-y in 8MCY'25, though August witnessed robust growth across most regions. Imports by South Korea (5.07 mnt) slid by 11% and by Taiwan 37% (0.83 mnt). Both countries have anti-dumping duties in place against certain Chinese commodities. On the other hand, Hong Kong (1.32 mnt) witnessed the sharpest gain of 69%.

Exports to South Asia (4.62 mnt) also edged down by 1% y-o-y, with an 11% fall in August, which could be attributed to a monsoon-led construction slowdown. Pakistan (2.02 mnt, +24%) was the highest importer, while India (1.45 mnt, -30% and Bangladesh (0.79 mnt, +19%) trailed. It seems that Pakistan and Bangladesh have made up for India's reduced share following the safeguard duty enforcement.

Meanwhile, Europe (3.66 mnt) experienced a 25% rise, led by higher intake in Belgium, Spain, Poland, and the Netherlands. Earlier in October, the European Commission proposed a revised steel safeguard mechanism, which will nearly halve the inflow of duty-free steel imports and double the out-of-quota duty to 50%. Importers will also be required to prove the country of melt and pour, to avoid circumvention attempts.

Shipments to CIS nations (2.28 mnt) climbed up by 32% in 8MCY'25, with data suggesting that this region has emerged as a new landing place for Chinese exports. Kazakhstan, Uzbekistan, Kyrgyzstan, and Tajikistan have registered steep growth in imports from China.

On the other hand, exports to North America (1.54 mnt) dropped by 14% y-o-y in 8MCY'25.

Outlook

China has consistently defied expectations of a y-o-y moderation in steel export volumes. With the final quarter of the year already here, there is no reason to suspect that the y-o-y uptrend will suddenly reverse. Analysts also suggest that exports will hit a new peak in 2025, with protectionist backlash forcing commodity and geographical diversification rather than restraint. Consequently, semi-finished (9.24 mnt in 8MCY'25, up 292% y-o-y), rebar, and wire rod exports have surged manifold.

Exports may remain high in September, with the VAT monitoring rules lifting orders, according to SMM. Its shipping data shows that China's port departures increased by 6% m-o-m to 12.04 mnt in August, owing to a price decline from early-month highs. However, it expects volumes to moderate slightly due to weak order books in July.