Chinese overcapacity is crushing the global steel industry

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Subscribe to enjoy similar stories. Each year China makes as much steel as the rest of the world combined. The vast scale of its output—around 1bn tonnes a year—is obscured by the fact that most of it stays in the country.

Lately, however, China’s exports of the metal have surged, reaching 90m tonnes in 2023, up by 35% on the previous year (see chart 1). That may be a fraction of China’s total production, but it is more than what America or Japan make in a year. And it is enough to build a thousand Golden Gate bridges.

With China’s economy struggling, its steelmakers are selling abroad at bargain prices, to the distress of foreign competitors and politicians alike. Last month Nippon Steel, Japan’s biggest steelmaker, called on the government to impose anti-dumping duties on Chinese imports. In the quarter to June its net profit shrank by 11% year on year.

ArcelorMittal, Europe’s steelmaking champion, has been hit even harder: its net profit for the same period was down by 73%. “We want fair competition, and we know that the competition against China is not fair," says Genuino Christino, the company’s chief financial officer. Such complaints tend to carry weight with politicians.

Steelmaking is often seen as a symbol of a country’s industrial heft. And although a glut means lower prices for a diffuse group of consumers, politicians worry about the concentrated pain it inflicts on manufacturing workers and regions. The rich world has experienced surges in Chinese steel exports before, including in 2008 and 2015.