China’s steel exports expected to falter in 2025 as pain from tariffs spread
JIUJIANG, CHINA – JUNE 17: A worker manufactures seamless steel gas cylinders for export at the workshop of Sinoma Science & Technology (Jiujiang) Co., Ltd. on June 17, 2024 in Jiujiang, Jiangxi Province of China.
Wei Dongsheng | Visual China Group | Getty Images
China’s steel exports will soon hit an eight-year high, before sweeping tariffs sink in and drag down the industry in 2025, industry watchers said.
As the biggest exporter of steel, China accounts for about 55% of the world’s steel production. The country’s steel exports have been surging this year and are expected to smash through the 100 million metric ton mark, matching levels last seen in 2016.
Strategists at Macquarie Capital predicted that China’s steel exports will reach 109 million tons this year, before declining to 96 million tons in 2025. Trade tariffs could further curb China’s steel exports, “albeit this may require a while to play out,” analysts from the the investment bank told CNBC.
Their predictions were echoed by analysts interviewed by Citigroup. China’s steel shipment is “skewed to the downside” from next year and onwards due anti-dumping measures, Ren Zhuqian, an analyst from steel consultancy Mysteel, said in a Citigroup note this month.
Foreign markets have been particularly crucial amid a domestic supply glut, as China’s economy grapples with a prolonged property crisis and slowdown in manufacturing activities.
In September, China’s steel exports jumped 26% from a year ago to 10.2 million tons, surpassing the 10-million ton a month benchmark that was last hit in June 2016. In the first nine months of the year, exports rose 21.2% year on year to 80.7 million tons, according to the customs data last week.
After hitting a record high of 112 million tons in 2015, the country’s steel exports had been on a multi-year slide before it started improving in 2020.
Steel export growth has accelerated ever since, propelled by a lack of domestic demand, even as overall export growth in China slowed sharply in September on the back of a series of disappointing data that pointed to a weak economy.
Anti-dumping ‘Wac-A-Mole’
Floods of cheap steel from China had sparked concern among its trading partners of unfair competition for domestic steelmakers. More and more have ramped up anti-dumping measures, including hefty tariffs.
Steel producers in importing countries have been “under massive strain,” said Chim Lee, senior analyst at the Economist Intelligence Unit, especially those in Southeast Asia and the Middle East.
Thailand expanded anti-dumping duties to 31% on hot-rolled coil, high-strength steel used for critical infrastructure construction, from China in August. Mexico imposed a nearly 80% tariff on some Chinese steel imports late last year.
This month, Brazilian government imposed 25% tariffs on all steel products from the country. And Canada’s 25% surtax on Chinese steel products, which it announced in August, came into effect on Tuesday.
These kinds of protectionism measures tend to have short-lived impacts, said Tomas Gutierrez, head of data at consultancy Kallanish Commodities, as steel exporters resort to measures such as “circumvention,” shaking off the China-label by making transits through a third-party country.
We see a ‘whac-a-mole’ scenario: when one country starts to limit steel imports from China, Chinese steel producers are likely to redirect them to another country until that market, too, imposes new trade restrictions.
Chim Lee
Senior analyst, Economist Intelligence Unit
But Vietnam’s ongoing anti-dumping probe into hot-rolled coil could derail China’s export momentum as it “impacts a much higher volume of Chinese steel,” Gutierrez said.
Vietnam is a major importer of Chinese steel, consuming about 10% of the country’s steel exports in 2023, according to a Mysteel report. Other top destination markets include Thailand, India and Brazil.
Last month, Indian government ordered tariffs of between 12% and 30% on some steel products imported from China and Vietnam, escalating an anti-dumping duty it imposed on Chinese steels last year.
“We see a Whac-A-Mole scenario,” EIU’s Chim said. The tariffs lead Chinese steel producers to redirect to alternative markets, “until that market, too, imposes new trade restrictions.”
U.S. President Joe Biden’s administration called for tripling tariffs on Chinese steel in April, and Republican presidential nominee Donald Trump said he could raise tariffs by 60% on Chinese goods if re-elected next month.
But the impact of these threats from Washington would be rather limited, as less than 1 percent of Chinese steel exports, worth $85 billion, were shipped to the U.S. in 2023.
Dwindling demand
For the first time in six years, the World Steel Association this month forecast that China’s domestic steel demand this year would account for less than half of global demand, citing “the ongoing downturn” in the country’s real estate sector.
China’s property-related steel demand may not see a substantial improvement until 2025 or 2026, EIU’s Chim said, as Beijing seeks to curb new housing supplies while clearing existing housing inventories.
New construction starts, the most steel intensive part of the property construction process, will continue to be very weak, Chim said.
Meanwhile, he added, state-led infrastructure investment, which has increasingly pivoted away from roads and railways to energy infrastructure, is unlikely to fill the gap left by home builders.
More domestic steelmakers had scaled back production given poor profitability on steel sales. Almost three-quarters of Chinese steel companies reported losses in the first six months this year, with many at risks of bankruptcy.
China’s production of medium-thick hot-rolled coil — a proxy of flat steel products — fell 5.4% from the prior month in September, and 6.4% on year, according to S&P Global, which cited official customs data.
On escalating trade tensions, a spokesperson for China’s customs administration said a majority of Chinese steel products were to meet domestic demand, before receding that the hard-rolled coils “would have broad appeal in overseas market,” due to continuous innovation and product upgrades in the industry.
A possible tax crackdown
Beijing’s possible crackdown on value-added tax could make matters worse for China’s steel industry.
This year, steel mills have been under pressure from regulators over allegations that they skirted taxes to make exports even cheaper.
Authorities had set up an investigative team to crack down on these “illegal” steel exports, Luo Tiejun, vice president of the state-backed Iron and Steel Industry Association, said in a meeting last week.
“If China really followed through [with the investigation], Chinese exports would be much less competitive and export volumes could come down,” Gutierrez said. But the government may not have the “confidence” for that yet.
It sounds like Tesla jumped the gun when announcing that Nissan drivers now have access to the Supercharger network in North America.
They will have to wait a bit.
Yesterday, we reported that Tesla added Nissan to the list of automakers with EVs capable of using the Supercharger network in North America.
However, Tesla has since removed Nissan from its list of automakers with access and switched the Japanese automaker back to the “coming soon” list.
Nissan confirmed to Electrek that access is not currently available, but it will be available by the end of the year.
It sounds like a miscommunication on Tesla’s side. We hear that it should be coming soon.
Elon Musk fired Tesla’s entire charging team – seemingly to make an example of its then-head of charging, Rebecca Tinucci, who reportedly disagreed with Musk about making further layoffs following another layoff wave.
Instead of just firing her, Musk decided to fire the entire team and then sent an email to other Tesla managers using the charging team situation as a warning.
Tesla has since had to rehire several former members of its charging team to rebuild the department.
This is believed to have slowed down the opening of the Supercharger network to other automakers in North America. We were told that communications with Tesla’s charging team were difficult to non-existent for those automakers for weeks earlier this year.
As we have previously reported, the situation has definitely slowed down Tesla’s own deployment of Supercharger stations.
Nonetheless, the Supercharger network recently hit the milestone of 60,000 chargers worldwide.
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Europe’s “green dream” Northvolt has filed for bankruptcy protection in the US after a rescue package failed to go through, leaving the battery maker with just one week’s worth of cash in the account. Cofounder and CEO Peter Carlsson, who spearheaded a costly expansion, has also quit.
The Swedish-owned battery maker filed for Chapter 11 in the Southern District of Texas, reports Bloomberg, with $5.8 billion debt. CEO Peter Carlsson, Telsa’s former chief products officer, stepped down from his role as CEO after the filing, but will remain onboard as advisor and director.
According to a statement, Northvolt said that its main factory will maintain business as usual during the reorganization, as the company now has a buffer from creditors, giving it time to restructure the balance sheet. However, the company said that this will not impact its business in Germany, and through the court process, Northvolt now has access to about $145 million in cash collateral. An additional $100 million in debtor-in-possession financing will be added to the pot via one of its customers, the report said.
In recent weeks, Northvolt has been in intense negotiations in the hope of securing a $300 million rescue package to give the company a bit more time to seek longer-term funding. But when that deal fell through, the battery maker was forced to seek protection from creditors via the Chapter 11 filing.
The company still has a $7 billion project in place in Quebec – a new campus that is set to include a cell production plant, battery recycling, and cathode active-material production facilities – and the bankruptcy won’t affect those plans, the company said on its website. “Northvolt Germany and Northvolt North America, subsidiaries of Northvolt AB with projects in Germany and Canada, are financed separately and will continue to operate as usual outside of the Chapter 11 process as key parts of Northvolt’s strategic positioning.”
The plant is expected to have capacity to produce 30 GWh of battery cell every year, with an expansion set to double that output, making it enough to power 1 million EVs. The Canadian government is putting $1.334 billion CND toward the project, with Quebec chipping in another $1.37 billion CND.
Northvolt has hit hard times in recent months, once thought of as Europe’s best shot to homegrown EVs and the makers of “the world’s greenest battery.” Enthusiasm mounted as the company opened the doors to its first plant in Sweden, in the small town of Skelleftea near the Arctic Circle, in 2021. Billions of dollars have been invested into the company, and Volvo, VW, and BMW rushed to place future orders.
All of this enthusiasm has been fueled by a vision to cut dependency on China by creating greener EV batteries using 100 percent recycled nickel, manganese, and cobalt. Plans were put in place to build factories in Gothenburg, in southern Sweden, and Poland, Germany, and Canada, all backed by huge government subsidies. Back in January, the company raised an additional $5 billion, firmly locking in its position as one of Europe’s best-funded startups and recipient of the largest-ever green loan in the EU.
But then things started going south, with Northvolt’s production problems and massive delays forcing BMW to cancel its €2 billion battery cell order with the company. This past May, Northvolt also announced that it pushing back its plans for an IPO until next year. The interim report that followed revealed the dire state of its finances and how far its production had fallen short of goals, with Carlsson admitting he had been “too aggressive” with the company’s expansion plan.
Since Northvolt has put in place a series of changes to reset the company’s course, including bringing onboard a new CFO, leaving the former CFO to focus solely on expansion plans. Plus the company started making cuts, including closing down its research center, Cuberg, in San Francisco and deprioritizing secondary businesses. At the end of September, Northvolt announced that it would cut 1,600 staff from three Swedish sites and about 20 percent of its international workforce.
Last month, Volvo started proceedings to take over their joint venture with Northvolt, while Volkswagen Group’s representative to Northvolt’s board stepped down this month. Sweden, for its part, is ruling out taking a stake to save its homegrown enterprise, Bloomberg reports. Carlsson had said last month that the company needs more than $900 million to permanently shore up its finances.
Photo credit: Northvolt
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Leading yard operation 3PL YMX Logistics has announced plans to deploy fully twenty (20) of Orange EV’s fully electric Class 8 terminal trucks at a number of distribution and manufacturing sites across North America.
As the shipping and logistics industries increasingly move to embrace electrification, yard operations have proven to be an almost ideal use case for EVs, enabling companies like Orange EV, which specialize in yard hostlers or terminal tractors, to drive real, impactful change. To that end, companies like YMX are partnering with Orange EV.
“This relationship between YMX and Orange EV is a significant step forward in transforming yard operations across North America,” said Matt Yearling, CEO of YMX Logistics. “Besides the initial benefits of reduction in emissions and carbon footprint, our customers are also seeing improvements in the overall operational efficiency and seeking to expand. Our team members have also been sharing positive feedback about their new equipment and highlighting the positive impact on their health and day-to-day activities.”
This Orange looks good in blue
One of the most interesting aspects of this story – beyond the Orange EV HUSK-e XP’s almost unbelievable 180,000 lb. GCWR spec. – is that this isn’t a story about California’s ports, which mandate EVs. Instead, YMX is truly deploying these trucks throughout the country, with at least four currently in Chicago (and more on the way).
“Our collaboration with YMX Logistics represents a powerful stride in delivering sustainable yard solutions at scale for enterprise customers,” explains Wayne Mathisen, CEO of Orange EV. “With rising demand for electric yard trucks, our joint efforts ensure that more companies can access the environmental, financial, and operational benefits of electrification … this is a win for the planet, the workforce, and the bottom line of these organizations.”
We interviewed Orange EV founder Kurt Neutgens on The Heavy Equipment Podcast a few months back, but if you’re not familiar with these purpose-built trucks, it’s worth a listen.
HEP-isode 26
SOURCE | IMAGES: YMX Logistics.
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