← External Forces: Trade, Geopolitics & Market Access (all topics)
China export overhang
What it is
China produces over half the world's steel and, when domestic demand weakens, exports the surplus. Its property downturn has pushed export volumes to levels not seen in years, depressing prices across Asia
India turned a net steel importer partly as a result, with imports arriving from China and via Vietnam and other routes
Impact on industries
- Sets a global price ceiling no Indian producer can escape - domestic realisations are capped by landed import parity regardless of local demand strength
- Trade remedies deal with volume, not the underlying overcapacity, and diverted flows simply reroute through third countries such as Vietnam
- Safeguard duties restored some domestic pricing discipline, and Indian demand growth gives producers a home market others lack
- The overhang persists until Chinese capacity rationalises or its construction demand recovers, neither of which is in prospect near-term