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Try the Free AI Search EngineChina’s Steel Market: Navigating Overcapacity and Export Regulations Amid Declining Demand
China’s steel market is currently grappling with a pronounced overcapacity issue, as highlighted in China’s excess capacity problem has no quick fix – WorldSteel. Recent satellite data reveal a mean activity drop across observed steel plants reflecting the industry’s adjustment to declining domestic demand and increased export levels.
In the first eleven months of 2023, China’s finished steel exports surged to a record high, recording 107.717 million metric tons, a 6.7% increase from the previous year, as mentioned in China’s finished steel exports up 7.5% in Nov, up 6.7% in Jan-Nov 2025. However, domestic steel demand is projected to decline by 2% in 2025 and 1% in 2026, leading to a challenging market environment for producers.
In examining individual plants, Tianjin New Tiangang experienced stable high activity levels until a notable drop in October to an activity level of 25%, juxtaposed against a mean of 43%, aligning with concerns expressed in Worldsteel: China’s steel surplus becoming increasingly difficult to address regarding price pressures from global trade barriers.
Heyuan Derun maintained an activity level close to the mean through September but rose to 40% in October, potentially reflecting increased demand for its electric arc furnace (EAF) produced finishes, amidst a tightening capacity landscape.
Fujian Sanbao showed a decline in activity to 27% in October from 31% previously, indicative of the broader market trends of decreasing domestic consumption, as noted in Worldsteel: The problem of excess steel production capacity in China will not be easy to solve.
Potential supply disruptions may surface from the regulatory changes, especially regarding the impending steel export quotas slated for January 2026, as discussed in China issues new regulations for exports of steel products. Buyers should consider consolidating procurement strategies ahead of these changes, particularly for products from plants facing export limitations, such as 天津新天钢联合特种钢有限公司 which may face production cuts in response to quota enforcement.
Given the context of falling domestic demand and rising export levels, steel buyers should prioritize sourcing from active plants like Heyuan Derun, which adapts to the evolving landscape, while closely monitoring regulatory decisions impacting production quotas.