Steel Crisis: China, a Giant Drowning Markets in Dumping Blows

The crisis gripping the global steel market is largely attributable to China's actions. The Asian giant, with its aggressive and market-distorting policies, has undermined the stability and fair competition of the sector worldwide. Its impact is primarily manifested through massive overproduction and the systematic use of dumping.

Unprecedented Overproduction: The Core of the Problem

China is by far the world's largest steel producer, with capacity reaching unsustainable levels. Despite a slowdown in domestic demand, particularly in the construction sector, Beijing has not reduced production; instead, it has continued to expand its steel mills. The OECD Steel Outlook 2025 issues a clear warning: global excess production capacity is projected to reach 721 million metric tons (mmt) by 2027. This figure is striking when considering it surpasses the combined steel production of all OECD countries in 2024 by approximately 290 million tons. A significant portion of this surplus is directly attributable to China.

Chinese Dumping: An Unfair Trade Practice

Facing an excess of domestic supply, China has flooded surplus steel onto foreign markets at artificially low prices, a practice known as dumping. This is made possible by:

• Massive State Subsidies: Chinese steel companies benefit from unprecedented government support. The OECD report highlights that steel subsidy rates in China, as a percentage of company revenue, are ten times higher than those in OECD countries. These subsidies allow Chinese firms to produce and sell steel at lower costs than global competitors, creating an unsustainable unfair advantage.

• Record Exports: Chinese steel exports have more than doubled since 2020, reaching a record high of 118 million tons in 2024. This surge has inundated international markets, depressing prices and making it impossible for producers in other countries to compete fairly.

  
  

The Devastating Consequences of China's Role

China's actions have had disastrous repercussions globally:

• Market Distortion and Price Pressure: The influx of underpriced Chinese steel has disrupted the supply-demand dynamic, leading to a collapse in global prices. Non-Chinese companies are crushed by this unfair competition, with profitability in OECD countries falling to near-historic lows.

• Massive Job Losses: The steel sector is a pillar of employment in many nations. Chinese dumping has led to steel mill closures and widespread layoffs. Between 2013 and 2021, an estimated 113,000 jobs were lost in member countries of the Global Forum on Steel Excess Capacity (GFSEC) due to this induced crisis.

• Global Reaction: Rising Tariffs: China's commercial aggressiveness has triggered an international reaction. The OECD has recorded a five-fold increase in anti-dumping measures since 2023, with many countries imposing significant tariffs to try and protect their domestic industries.

• Threat to Decarbonization Goals: Excess capacity and the reliance on outdated production technologies threaten global green transition efforts. It's projected that 40% of new Chinese production capacity between 2025 and 2027 will be based on high-emission processes (blast furnace/basic oxygen furnace - BF/BOF). This not only makes it harder for China itself to reduce its emissions but also discourages investments in cleaner technologies globally, as cost competition makes low-carbon solutions less attractive.

In summary, China's role is not just that of a dominant player in the steel market, but a destabilizing force that, through state subsidies and unbridled overproduction policies, has deliberately created an excess of supply, flooded global markets with dumping, and consequently, harmed employment, business profitability, and even efforts towards a more sustainable industry.