China’s crude steel production increased due to a surge in exports and reduced raw materials costs, which improved profit margins.
As global trade tensions escalate and countries put up new walls against Chinese goods, China’s steel industry is under pressure but not slowing down. It is rushing to export them before any new restrictions come up, especially as the United States and other countries are playing with tariffs, forcing it to rethink where the destination will be for its surplus steel.
Chinese crude steel production increased due to a surge in exports and reduced raw materials costs, which improved profit margins.
In March, mills produced almost 93 million tons, reflecting a yearly increase of 4.6 percent since the price of inputs such as coking coal (used in blast furnaces to manufacture steel) and iron ore decreased over the period. That pushed the production in the first quarter to over 0.6 percent to over 259 million tonnes, a figure that is probably disappointing the government, which has committed to reducing the output to tackle China’s surplus of metal.
Since the United States announced a significant 145 percent tariff on steel, China will have to find new destinations to export steel.
According to Indonesian Iron and Steel Industry Association (IISIA) Chairman Muhammad Akbar Djohan, China is the largest iron and steel producer globally and currently manufactures around 1.2 billion tons annually.
The steel industry is one of the biggest reasons for the collapse of China’s property market and decelerating economy. According to a report by Wood Mackenzie Ltd. earlier this month, steel is overflowing by about 50 million tons and will reach 250 million tons within the next 10 years.
Selling abroad was a ‘useful’ avenue for China to soak up domestic oversupply. In March, exports increased by 5.7 percent, reaching a five-month high, as traders front-loaded their ships in fear of trade tensions. However, given the increasing import restriction, it is an open question how far it can maintain the surge.
The crude oil refining industry, another smokestack industry set for downsizing, saw an increase of 0.4 percent.
Gains are limited as vehicles become increasingly electrified, which takes a toll on fuel demand. On the other hand, plastic consumption will suffer due to the tariff war with the Trump administration.
Larger gains were seen in industries engaged in the mining and drilling of fossil fuels.
Aluminum production also saw a gain of 4.4 percent as smelters capitalized on the drop in raw materials costs.
There was a 1.8 percent increase in electricity generation, although this increase lagged 7.7 percent in industrial output and 5.4 percent in economic growth.
In the first quarter of 2025, the future for China’s economy was bright as it grew more than expected, but its forecasts quickly deteriorated due to Donald Trump’s massive tariffs.
President Donald Trump initiated a series of tariffs on crucial minerals, the latest move in the expanding trade war that has targeted key sectors of the global economy.
Rio Tinto Group, a British-Australian company and the world’s second-largest metals and mining corporation, and Vale SA, a Brazilian company engaged in metals and mining, witnessed impacting their iron ore operations due to bad weather.
Some analysts believe the Trump administration plans to leverage the ongoing tariff negotiations to pressure US trading partners to restrict their interactions with China.
Though China’s steel production is experiencing an increased wave and favorable margins, the road ahead is filled with challenges. Mounting international trade barriers, especially from the United States, threatens its export channels, especially with its accumulated domestic steel. China’s steel giants see themselves at a crossroads: between economic ambition and geopolitical challenges.
