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China’s Steel Market Faces Downturn Amid EV Import Disputes

China’s steel market sentiment has turned negative, driven significantly by the ongoing trade tensions connected to electric vehicle import regulations with the European Union. Recent satellite observations have indicated a notable shift in activity levels at key steel plants, reflecting broader market challenges. The articles “China and the EU agree on steps to resolve their dispute over EV imports“ and “EU guidance sets price undertaking route for Chinese EV imports“ highlight the complexities of trade that influence steel demand, but they do not establish clear direct connections to activity changes at individual steel plants.

Bar chart and satellite map of steel production activity in China

Activity at Dongbei Special Steel remained high, with peak levels of 80% in October, although it dropped to 25% mean activity overall by the end of October, indicating instability. There is no explicit connection to the EV trade disputes.

Bengang Steel Plates experienced a slight decline from 52% in August to 40% in October, suggesting increasing pressure, yet again, no direct correlations to the ongoing EU negotiations can be drawn.

In contrast, Fujian Sanbao Steel struggled significantly, with its activity plummeting from 31% to 27% over the same period. This drop raises concerns over potential supply disruptions for buyers relying on products like hot-rolled steel.

The visible decline in aggregate steel plant activity, particularly at Fujian Sanbao Steel, amidst the backdrop of trade disputes signals potential supply chain vulnerabilities. Steel procurement professionals should be prepared for potential shortages and consider diversifying supply strategies. It may be prudent to secure contracts ahead of emerging regulatory landscapes impacting steel-intensive industries, especially automotive and infrastructure projects heavily intertwined with EV developments.