China has just shy of 10 times the steelmaking capacity of the United States. It has been accused of dumping cheap steel on the global market to beat out competitors. During his administration President Trump pushed China to cut production, and more recently, in 2024, President Biden raised tariffs on Chinese style and aluminum too. During 2024, China’s steel industry has been declining, and making cutbacks due to slumping domestic demand as well as anti-dumping measures taken by a number of nations. At the same time, China remains by far the world’s largest steel producer at over a billion tons per year, accounting for over half the world’s production.
While much of China’s total steel production is domestically consumed, they are also the world’s largest exporter of steel. In 2023, China exported 94.5 million tons of steel, far exceeding steel exports in the previous three years.
In 2024, China’s economy founded itself in crisis. The real estate market was collapsing due to oversupply, local governments were in excessive debt, consumption was weak, and the population was rapidly aging. GDP growth was falling behind targets as well. In light of China’s weakening economy lowering domestic demand, as well as anti-dumping measures taken by many countries, such as President Biden’s tariffs, the 2025 outlook for China’s steel industry is not great. With more supply than demand, the profits situation doesn’t look good. That said, China remains the main player in the global industry due to its gigantic production. Here’s a look at the state of the global steel industry more recently and the impact of the Chinese economy.
Anatomy of the Global Steel Industry
Steel is one of the most innovative and flexible alloys, which can be customized for many requirements. Variants of steel are used in housing, transportation, industrial, automobile, infrastructure and utilities sectors, making it one of the world’s most versatile materials, one that’s easily reused and recycled. (For more, read: Strength in Steel.)
China, India, Japan, the United States, and Russia were the top five steel-producing nations in 2023, in that order, with China the leader by far. China produced around 1 billion tons. The next closest country, India, produced only 140 million tons. Japan produced 87 million tons, the United States 80 million, and Russia 75 million tons. While China and Japan are the top exporters of steel, the United States and Germany are the leaders for imports because of their economies’ high consumption rates.
China is the world’s largest producer of steel, and it is also the world’s largest consumer of the material. Given such a dominant market share, along with the large amounts of steel used across different sectors of its economy, any slowdown in the Chinese economy will have a major impact on the global steel industry. The 2024 slowdown in the Chinese economy has left them with an oversupply of steel. Not only does this hurt the profitability of Chinese steel manufactures, but it also leads to China engaging in steel dumping which hurts the steel industry in other countries. The graph below shows what happened to the VanEck Vectors Steel ETF (SLX) in 2015 when the Chinese economy slowed down.
Recent Developments
More recently, global steel output has been increasing, investors fear a slow down in the Chinese economy and the prospect of trade wars initiated by the Trump administration. However, steel prices are on the increase.
The World Steel Association reported that in July 2018, global steel output rose by 5.8% in a month, an increase that follows growth of almost 13% in the same quarter one year ago.
Although China has attempted to cut steel production to mitigate pollution, some plants are ramping up capacity, and China’s steel output is on the rise. This increase in output has also maintained the demand for high-grade iron ore, a raw material for steel and a determinant of the cost of steel, and has propped up prices.
In the United States, encouraged by robust domestic demand, domestic steel producers are increasing their steel prices because of increasing input costs and a depreciation in the rupee. Thus, because steel output is growing and prices are increasing, steel companies should see increased earnings and higher share prices.
However, if the demand for steel drops, China will export surplus steel and lower international prices. If output falls, the demand for raw materials will slow down and further affect prices. Thus, China is the biggest influencer on global steel.