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China, how it impacts the world Steel industry

China is one of the largest steel producers of the world which holds a strong position in the steel industry. China’s produced 79.0 Mt of crude steel in March 2020, a decrease of 1.7% compared to March 2019 but still it holds the first position when it comes to production and export. But history was different, prior to 1991 the top steel producers were USSR, Japan, and United States. But the tables were turned post ascension to the WTO. China became the world’s top steel producer with production of 123 million tonnes of steel in 1999. After its ascension to the WTO it aggressively expanded its production for its growing appetite of manufacturing industries such as automotive vehicles, consumer electronics and building materials.

The top leaders from 1967 to 2018 can be seen in the infographic video above

The Chinese steel industry is dominated by a number of large state-owned groups which are owned via shareholdings by local authorities, provincial governments and even the central authorities. According to China Iron and Steel Association, the top 5 steel groups by production volume in 2015 are Baosteel Group–Wuhan Iron and Steel Corporation, Hesteel Group, Shagang Group, Ansteel Group and Shougang Group.

In 2011 China was the largest producer of steel in the world producing 45% of the world's steel, 683 million tons, an increase of 9% from 2010.

6 out of 10 largest steel producers in the world are in China.

Modern life is dependent on steel. Infrastructure, buildings, cars, etc. require huge amounts of iron and steel in the production process during its modernization process, from developing to developed all the nations in this world require steel for the internal development. China has taken the advantage of the situation and has built up a gigantic production capacity for iron and steel and is by way the largest steel producer worldwide with a production volume of nearly 930 million metric tons of crude steel in 2018.
Although China consumes the largest share of its own production, but export also plays a major role for Chinese steelmakers. Some controversial accusations have also been made along the way and some voices have been raised stating that state subsidized Chinese steel mills are flooding the world market with cheap steel at dumping prices.

China has approximately 10 times the steelmaking capacity than that of the United States of America. It has been accused of dumping cheap steel in the global market to beat out competitors, and the Trump administration has encouraged Chinese leaders to cut production in order to improve the profitability of U.S. steelmakers. In 2017, China cut overcapacity in the steel sector by shutting down about 50 million tons for domestic environmental and economic reasons.

The state also supported the steel industry by providing subsidies and local support which helped the industry in increasing the production and also reduce the cost because of which the prices offered are competitive as compared to the rest of the world.

China generally help the developing countries and underdeveloped countries by providing them infrastructure to compete with the world but with the help of bilateral treaty it generally exports its steel production at a good price to these third world countries, which helps in boosting the production and also derives the steel prices.

China produces the steel products like HRC, CRC, HDGI, PPGI, etc. in a wide price range, to cater the need of every consumer. The more the price the better is the quality but even at a low budget a consumer can get what he is looking for, which is possible only in China. While producers in other countries have limitations in terms of specs and sizes due to production cost, China offers a wide range of material that fits in range of both quality and price oriented customers.

What we think

We at EU Metal think, cheap labour, Foreign investments, flexible approach, state’s support and aggressive production has led China to become the world’s top steel producer. So, if we apply basic economics the biggest supplier can easily influence the price because it is collateral to the availability of the steel products.

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