1. Direct Negative Impact: Reduced Price Competitiveness
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Higher Export Prices Rising domestic steel prices directly increase FOB (Free On Board) export quotations. For example, if the domestic price of hot-rolled coil rises by 300 RMB/ton (~42 USD), export prices may follow suit, prompting international buyers to seek cheaper alternatives (e.g., Indian or Vietnamese steel mills).
- Reference Data: In 2024, China’s average steel export price was ~850 USD/ton, 6% higher than India’s. If the price gap widens to 10%, the risk of order losses increases significantly.
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Risk of Long-Term Contract Breaches Some pre-signed export contracts (e.g., infrastructure projects in the Middle East) may face renegotiation or penalties if domestic mills cannot fulfill orders at agreed prices.
2. Structural Opportunities: High-End Products & Regional Substitution
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Resilience of High-End Steel Exports Premium products like electrical steel and automotive sheets (accounting for 15% of exports) face lower price sensitivity due to technical barriers. For instance, Baowu’s silicon steel exports rose 8% in price in 2024, yet order volume still grew by 12%.
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Substitution Potential in Key Markets In regions with strong infrastructure demand (e.g., Southeast Asia, Africa), if local mills lack capacity (e.g., Vietnam’s Hoa Phat Group operated at just 75% utilization in 2025), Chinese steel remains irreplaceable.
3. Policy Countermeasures
- Export Tax Rebate Adjustments If rising prices severely hurt exports, the government may reintroduce rebates (e.g., the 13% rebate for cold-rolled and galvanized sheets, canceled in 2023) to mitigate cost pressures.
- Exchange Rate Tools A controlled depreciation of the RMB could offset some price hikes (e.g., a 1% depreciation against the USD effectively reduces export prices by ~7 USD/ton).
4. Supply Chain Adaptation
- Overseas Production to Bypass Domestic Costs Steelmakers may accelerate overseas investments (e.g., Tsingshan’s Indonesia base, Ansteel’s U.S. plant) to produce and export locally, avoiding domestic cost pressures.
Conclusion: Short-Term Pressure, Long-Term Diversification
- Short Term: Exports of commoditized steel (e.g., rebar, hot-rolled coil) may drop by 5–10%, especially in price-sensitive markets like Southeast Asia.
- Long Term: High-end products and globalized supply chains will cushion the impact, with 2025 full-year exports likely stabilizing at 65–70 million tons (±3% YoY).
Recommendations for Exporters:
- Adopt floating price clauses in contracts to share cost risks.
- Increase the share of high-value-added products in exports.
- Leverage tariff benefits under RCEP (e.g., ASEAN markets).
(Data Sources: China Customs, World Steel Association, Shanghai Metals Market)
