China's steel exports hit record but rally may prove short-lived

China's semi-finished steel exports surged to a record high in June, pushing the country's total steel shipments to an all-time peak, according to China's customs data.

But the rally may prove short-lived as weakening overseas demand signals a potential decline in the third quarter, market participants said.

China exported 2.839 million metric tons of semi-finished steel in June, up 56.6% month over month and 141.5% year over year, customs data showed July 20.

In particular, slab exports jumped to 941,960 mt, up 112.1% from May and 564.8% year over year. Billet exports increased 37% month over month and 79.8% year over year to 1.851 million mt in May.

As a result, China's combined exports of semi-finished and finished steel reached 13.159 million mt in June, up 21.2% year over year. June marked the second consecutive month in 2026 in which the country's total steel exports recorded year-over-year growth.

For the first half of 2026, semi-finished steel exports increased 62.7% from a year earlier to 9.594 million mt. Combined exports of semi-finished and finished steel totaled 64.468 million mt over January-June, up 0.7% year over year.

China's net exports of semi-finished and finished steel products reached 61.205 million mt in the first six months of the year, up 1.2% year over year.

Outlook dim

Several mill and trading sources said sluggish domestic demand and relatively low steel prices have provided the foundation for robust steel exports in the first half of 2026, but, in turn, the strong export performance has helped limit the downside of Chinese steel prices.

However, they expected exports of both semi-finished and finished steel to decline in July, August and potentially September, as overseas order bookings have weakened since early June and have yet to show signs of recovery by late July.

One mill source said the country's export volume could fall sharply in August because of poor order bookings received in June and so far in July. The source added, however, that China's steel exports could recover again in the fourth quarter.

Another mill source said weakness in China's domestic steel market is likely to persist through at least July and August.

"End-user steel demand in China may see some seasonal recovery in September, but overall domestic demand still lacks growth momentum in the second half of the year," the source said. "As a result, steel exports are likely to remain at relatively high levels through the end of this year."

A third mill source said China's combined exports of finished and semi-finished steel in 2026 could end up broadly in line with last year's total of 133.846 million mt.

One trader said overseas order bookings handled by the company showed little change in June and July, but still expected China's overall steel exports to retreat in the third quarter.

Another trader said the sharp increase in antidumping cases targeting Chinese steel products has made it increasingly difficult for traders to expand sales volumes. However, the trader added that the competitiveness of Chinese steel prices should prevent a significant drop in total steel exports.

According to data from the China Ministry of Commerce's Trade Remedy Information platform, Chinese steel products have been subject to duties in 20 antidumping and safeguard cases so far in 2026, compared with 13 antidumping cases for the entire 2025. Another 21 trade cases involving Chinese steel are currently under investigation.

S&P Global Energy assessed SS400 HRC at $484/mt FOB China and 3SP billet at $458/mt FOB China on July 20. HRC was down $2/mt from the start of July, while billet was unchanged over the same period.