A Danish politician in the 20-century famously said: “It is difficult to make predictions, especially about the future”. He was referring to the difficulty in making accurate predictions. However, after China´s steel exports approached record levels in 2024, ASN believes much of what will happen in 2025 is entirely predictable. Steelmakers in China will continue vigorously exporting – because the fundamental reason why they did it last year hasn´t changed. The drop-off in domestic demand for steel in China, due to a collapse in the property market, continues and shows no signs of improving. There will thus be ongoing pressure for Chinese steelmakers to find buyers in the international arena. The final figures for 2024 are yet to come in, but by the end of November China’s finished steel exports had risen by 22.6% on the year, reaching 101.2 million metric tonnes (Mmt), according to the China Iron and Steel Association. The record for one year was 110 Mmt in 2015. In recent months, the Chinese central government

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has introduced several fiscal initiatives to reinvigorate its steel-hungry manufacturing industries, plus tax incentives for the property market. However, none of these measures have led to any noticeable or sustained improvement in steel demand. The immediate future, therefore, lies abroad where Chinese steel can often be delivered at a price below that of its competitors in the destination countries. Nothing personal, it´s just business, the Chinese steelmakers would say. Flooding the market, destructive oversupply, a glut of cheap imports driving down prices and wiping out all our profit margins, the home nation producers would claim (as they have done). During 2024, to fight against and dissuade Chinese exports, the barriers went up. As a sample: Mexico imposed 80% tariffs late last year on Chinese steel products; Thailand increased duties on Chinese steel to 31%; Brazil, the EU and Canada also imposed 25% tariffs, followed by Malaysia and India (12 – 30%). Likewise, Indonesia, Turkey and Vietnam announced anti-dumping duties on the high volume of low-priced Chinese steel entering their markets. The incoming Trump administration has promised aggressive tariffs ranging from 60% to 100% on Chinese steel. Meanwhile, the EU´s Carbon Border Adjustment Mechanism (CBAM) is nearing full activation. And yet, despite all these measures, Chinese exports kept coming. Thus, for the foreseeable future, overcapacity will continue to apply downward pressure to steel prices and negative pressure to steelmakers’ operations.

Europe is being hit the worst. EUROFER, the European Steel Association which represents the entirety of steel production in the European Union, claims global steel overcapacity reached 551 Mmt in 2023 and may now be at 560 Mmt. This is four times the EU’s annual steel production. It says imports now account for 27% of the EU market. EUROFER says EU steel production has plummeted by 34 Mmt since 2018, falling to just 126 Mmt in 2023. Nearly 100,000 steel jobs have been lost in the past 15 years, with more cuts looming. Capacity utilisation in the EU has sunk to an unsustainable 60%.

“The clock has already struck midnight. How many more plant closures, job losses and stalled decarbonisation projects will it take before the EU and Member States wake up?” asked Axel Eggert, Director General EUROFER in a November statement. “Europe’s de-industrialisation is accelerating with steel, automotive, renewables and batteries all on the brink. Without immediate action, Europe’s manufacturing base will disappear. We urge the new European Commission and EU governments to stop this bloodshed and adopt swift measures on trade, CBAM, energy and steel scrap, while working on a structural solution to preserve our industry’s competitiveness,” he added.

In December, Thyssenkrupp Steel Europe cited competition from low-cost Asian imports and high energy costs in its decision to reduce its German workforce from 27,000 to 16,000 by 2030. The restructure will also include a reduction in annual production capacity of up to 25% from its current 11.5 Mmt. Meanwhile, ArcelorMittal has announced a delay in the decarbonisation plans at its Dunkirk site and the closure of distribution centres in Reims and Denain. It said the influence of China’s overcapacity was a factor in its decision.

EUROFER has predicted these declines are irreversible and has proposed an urgent European Steel Action Plan. “This isn’t just about steel; it’s about all the value chains – from automotive to renewables – that depend on it. It’s about Europe’s resilience, prosperity and climate leadership. Without urgent EU intervention, we face total dependence on China, the US and other global competitors where industries thrive under favourable conditions,” concluded Mr Eggert.

In other news, the outgoing US President, Joe Biden, has blocked Nippon Steel´s $14.9 billion (AUD 23.9 billion) bid for US Steel. “A strong domestically owned and operated steel industry represents an essential national security priority and is critical for resilient supply chains,” Biden said in a statement last Friday. “Without domestic steel production and domestic steel workers, our nation is less strong and less secure.” He may well believe that: but he will also have enjoyed gazumping Donald Trump who vowed on the campaign trail to block the deal. With the acquisition of US Steel, Nippon Steel had aimed to raise its global output capacity to 85 Mmt a year from the current 65 million, thus making it the third largest steel producer in the world. The Pittsburgh-based US Steel had warned that mills could close and thousands of jobs would be at risk without the deal.

In a joint statement, Nippon Steel and US Steel called Biden’s decision “unlawful”. Nippon Steel has the option to file a lawsuit against the US government, challenging the procedures behind the decision. If the courts uphold Biden´s (or later Trump´s) decision, Nippon Steel will face a $565 million penalty payment to US Steel for the deal’s collapse. Market observers have already commented that blocking the deal may dissuade international investors from bidding for politically-sensitive US companies with a unionized workforce.