Chinese Steel Exports Continue to Grow

Chinese Steel Exports Continue to Grow

The steel industry was once mostly based in England and, later, the United States. Today, however, half of the steel used around the world is produced in China. The rising export of steel from China is, in fact, one of the factors that is redefining the global steel market. Buy USA from Olympia Steel Buildings

A Major Increase

China exported only about 4,000 million tons of steel per month in the spring of 2013, but by the fall of 2014, that number had increased to 10,000 million tons every month. That’s an increase of more than 100 percent within a year and a half, and it has only increased. This has made a number of steel companies worry about their profit margins. Chinese steel is actually fairly cheap, and a number of businesses have already begun using it over steel produced by other companies.

Why Chinese Steel Became a Major Player in the World Economy

There are a number of different reasons why China has been able to export steel for lower prices. First, China had a steel surplus. It produced a large amount of steel, but uses very little. In fact, its consumption of steel has actually slowed down over the years. However, it continues to remain steady or grow elsewhere. The reason China has such a large steel surplus is because it’s actually cheaper to produce large runs of steel. The excess, then, can be sold off to further increase their profit margins. Then there’s the fact that the Chinese government supports the country’s steel industry. With cheaper credit options and subsidies on their exports, the cost of manufacturing and exporting steel drops even more. A third factor is that many financial experts believe that the Chinese currency is currently undervalued. This means that Chinese products are cheaper than those produced by other countries.

Reaching its Peak

However, some experts are wondering how long China can continue to remain at the top of the steel export business. In fact, as demand for steel in China continues to shrink and its economic growth slowing down, many feel that the excess amount has reached its peak. The demand world-wide may have been met, but Chinese plants don’t seem to be reducing their production. With upwards of 30 percent of all steel produced in China in excess of its needs, there may be more steel than is actually needed around the world. Will Chinese steel exports continue to grow, or will this major excess be just that—excess? Experts predict we may not know until 2016.