The Chinese steel market is navigating a prolonged weakening in demand rather than a cliff-drop collapse, as the steep decline from property is increasingly offset by manufacturing and exports, according to experts at an industry conference last week.
China consumes roughly half the world’s steel, marking the sector as a cornerstone of the country’s rapid industrialisation in recent decades. But mills have since fallen on harder times. Their output in 2025 of 961 million tonnes was nearly 10 per cent below a peak of 1.065 billion tonnes in 2020.
Over that period, about 83 million tonnes of apparent demand for rebar, used in construction, was lost due to the country’s property crisis, Zhao Jinkui, deputy secretary-general of the China Iron & Steel Association (CISA), told attendees at Singapore International Ferrous Week.
But the broader picture is less dire. China’s apparent demand for all kinds of steel was just 3.1 per cent below the 2020 level, said Jiang Li, an independent analyst and veteran of China’s largest listed mill Baoshan Iron & Steel.
“Chinese steel demand is moving from a property and construction-led model, to a high-level rebalancing supported by manufacturing, infrastructure support and the energy transition,” she said.
That suggests sectors such as shipbuilding, new energy equipment and advanced manufacturing have absorbed much of the slack. Jiang said the market’s expectation of a “cliff-like drop” in demand is misjudged, when instead consumption will decline gradually through 2050.
The country’s construction demand for steel shrank to 49 per cent of the total in 2025, from a peak of 58 per cent in 2020, according to Yilin Wang, general manager at the research arm of China Mineral Resources Group.
Wang projected the government’s efforts to reduce overcapacity will see Chinese output drop to 900 million tonnes by 2030. The expansion of markets in India and South-east Asia will further shrink the country’s global share of steel production, she said.
Exports have served as a crucial cushion for steelmakers, hitting a record 119 million tonnes in 2025. But trade patterns are shifting as traditional buyers impose duties to protect their domestic industries, and Chinese mills are forced to look for other markets.
Shipments to Africa, for example, rose 30 per cent in 2025, while exports to North America fell nearly 20 per cent, according to CISA data.
The European Union’s Carbon Border Adjustment Mechanism, designed to tax cheaper goods produced under weaker environmental rules, adds another complication for exporters.
CISA’s Zhao criticised the EU’s emissions benchmarking as “grossly unfair” because it fails to capture China’s progress in decarbonising steel. He pointed to more than 300 billion yuan (S$57 billion) invested in environmental upgrades, and 932 million tonnes of capacity retrofitted to ultra-low-emissions standards. BLOOMBERG
