What is the scenario for China's steel industry in 2025?

In this case, China's steel output would remain at around 1 billion tonnes.

Two Views on China's Steel Industry

There are two ways to look at China's 1.7% fall in steel output last year. On the negative side, it confirms that the world's largest steelmaker is now in a clear downward trend, with further declines likely this year, according to Reuters.

On the positive side, the steel industry has actually shown remarkable resilience in the face of major economic challenges, with output remaining almost unchanged at a very high level for the past five years.

Both views are correct and reflect the classic "glass half full or glass half empty" situation.

From a “glass half empty” perspective, it can be seen that China’s steel output peaked at 1.065 billion tonnes in 2020 and has been declining since then, reaching 1.005 billion tonnes in 2024.

But from another perspective, China’s steel output has remained within a range of 70 million tonnes from 2019 to 2024, showing a relatively stable performance.

It can be said that China’s steel output may have peaked, but the decline so far has been quite mild, and output remains high despite the world’s second-largest economy having faced many difficulties since the COVID-19 pandemic.

The question is, what is the outlook for China’s steel industry in 2025?

The answer is unclear at this point and depends on a number of factors that have yet to materialize, most importantly the trade tariffs that will be implemented by the new administration of President Donald Trump, who took office on Monday.

It is also uncertain whether 2025 will be the year that China's residential property market recovers, or whether it will remain constrained by weak developer balance sheets and consumer sentiment.

Another factor is what will happen to China's steel exports in 2025, after hitting a nine-year high of 110.72 million tonnes in 2024. That would represent a 22.7% increase, or more than 20 million tonnes, from the previous year, helping to offset some of the decline in domestic consumption by steel mills.

The volume of Chinese steel pouring into global markets has raised concerns for some countries like India, which are trying to boost their domestic steel industry. This raises the possibility that China will find it more difficult to increase its steel exports by 2025. However, it is important to note that not all importing countries are opposed to buying more steel from China, especially those without a domestic steel industry.

Best-case scenario for China’s steel industry in 2025

The best-case scenario for China’s steel industry this year is one in which trade tariffs are not too harsh, the domestic economy continues to recover, and construction activity stabilizes or even increases. In this case, the best outcome for China’s steel output would be to maintain around 1 billion tonnes.

This also means that China’s iron ore demand is likely to remain stable, although it may ease slightly from the record 1.24 billion tonnes in 2024. Much of the 4.9% increase in imports, or 57.5 million tonnes, last year was to replenish stocks rather than meet actual demand.

Port inventories tracked by SteelHome ended 2024 at 146.85 million tonnes, up 32.4 million tonnes from the end of 2023.

It is unlikely that inventories will increase significantly in 2025, which could limit iron ore imports. However, if the downward trend in iron ore prices since 2024 continues, traders could take advantage of cheaper supplies.

Vietnambiz