China’s Steel Exports Soar But Aluminum Shipments Slide
China’s exports of steel products increased this year as domestic demand – especially from property development – slumped, while aluminum demand plunged due to increased activity in the manufacturing and energy sectors.
China produces more than half of the world’s steel and aluminum. But in an effort to control excess capacity, Beijing has set informal production ceilings, which both sectors are likely to break.
Steel production was informally limited to no more than 1.005 billion metric tons in the previous year, and considering that production in the first 10 months of this year was 817.87 million tons, it is likely that production in 2025 will fall below 1 billion tons, which is the first time this has happened since 2019.
The weakness in the property construction sector is thought to be due to demand for soft steel, and mills have tried to compensate by exporting more.
China’s exports of steel products rose 6.7% to 107.72 million tonnes in the first 11 months of this year compared with the same period in 2024, according to customs data released on Monday.
Assuming December exports were around the year’s average, this would mean China’s steel shipments would be around 117 million tonnes, which would be a record high, surpassing 2015’s 112.39 million tonnes.
Exports currently make sense for steel mills, as domestic prices are slumping to near a five-year low, at a Shanghai exchange rate of RBF1! ended at 3,128 yuan ($442.43) a tonne on Monday, after trading mostly sideways since a low of 3,012 yuan reached in early June.
Chinese steel prices are competitive with other benchmarks, with the LME contract for Turkish rebar expiring at $560.50 a tonne last week.
China has succeeded in increasing steel exports even though some countries have imposed import tariffs to protect domestic producers.
It is worth noting that most of China’s steel products are shipped to other Asian countries, especially countries with limited domestic steel production, so it makes economic sense to purchase cheaper Chinese steel products.
ALUMINUM DESCENDANTS
In contrast to the growth in steel exports, China’s shipments of aluminum and other processed products experienced a decline, with exports in the first 11 months of this year falling 9.2% to 5.59 million tons.
China’s aluminum production is expected to approach its annual limit of 45 million tonnes, and rising demand from the country’s manufacturing and energy sectors means less of the metal is available for export.
The disappearance of Chinese aluminum in the global market lifts the London benchmark price ALI1! to $2,920 a ton on December 5, the highest since May 2022. The contract has jumped 27% since its 2025 low of $2,300 in early April.
The price increases have provided respite for Western-based smelters, which have struggled to remain competitive in recent years, especially smelters in Europe and Australia facing rising energy costs.
If Beijing maintains its annual aluminum production limit at 45 million tons, it will likely tighten global supplies further in 2026.
The question is whether China’s steel sector is likely to follow aluminum’s lead.
If the assumption is that Beijing will limit annual steel production to a maximum of 1 billion tons, this will depend on how quickly domestic demand recovers.
As long as construction remains stalled, it is likely that Chinese steel mills will continue to try to export for profit, or reduce capacity through the retirement of old furnaces.
Source: Reuters
