According to a report by Bloomberg, Edwin Basson, director general of the World Steel Association (worldsteel), has stated that China’s long-standing steel overcapacity is becoming increasingly difficult to address, and added that the sector is so deeply integrated into China’s broader industrial and economic system that quick fixes are impossible. Basson stated, “There’s no short-term practical solution”, as shutting steel mills would have major knock-on effects across the domestic economy.
The warning comes as the Chinese steel industry, which has an annual steel capacity of one billion mt, faces a structural imbalance created by years of rapid capacity expansion for demand levels that no longer exist. A prolonged slump in China’s property market has sharply weakened domestic consumption. As demand falls, excess material is being redirected into global markets at increasingly low prices, creating intensified competitive pressure on producers worldwide.
The trend is now reshaping global trade dynamics. Worldsteel expects Chinese steel demand to fall by two percent in 2025 and by another one percent in 2026, extending a multi-year decline that has pushed Chinese mills to export record volumes despite escalating protectionist barriers. According to the latest data, Chinese steel exports have already exceeded 100 million mt in the first 11 months of 2025, putting the country on track for an all-time annual record.
Export pressure is increasingly meeting a global wall of tariffs
China’s steel industry has been a central target of trade-remedy actions worldwide. The US imposed new tariffs earlier this year, while countries across Asia have introduced antidumping duties on Chinese steel. Mr. Basson noted, “The open market we enjoyed from 2000 to about 2020 is disappearing,” with free trade flows becoming increasingly fragmented as governments move to shield domestic producers.
Market uncertainty continues to spill into raw material prices. Singapore iron ore futures fell 0.9 percent to $102.45/mt, reflecting concerns about softening Chinese demand and rising export-driven volatility.
Fragmented global steel industry risks carbon emission reduction targets
Noting that trade is not the only area at risk, the association warns that a fractured global steel market could also undermine the sector’s ability to decarbonize. Rizwan Janjua, worldsteel’s head of technology, said that developing breakthrough technologies to cut carbon emissions in steel industry, which is responsible for roughly eight percent of global carbon output, requires unprecedented international cooperation, which becomes harder as markets and policies diverge.