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The year 2025 began in Asia with significant uncertainties in the steel market. After ending 2024 on a weak tone, the sector is facing a complex environment of trade tensions, tariff threats, and protectionist policies that could affect the first quarter.
As market participants monitor possible Chinese economic stimulus and export opportunities, mixed signals emerge for the near future.
The Impact of China’s Policies and Export Dynamics
China, the world’s leading steel producer, remains the focus of attention. Despite the authorities’ attempts to support the economy through economic stimulus in September 2024, the market has not reacted as expected.
Hot-rolled steel (HRC) production margins in China, after reaching a 16-month high of $34.33/ton (mt) in October, quickly fell into negative territory, closing December with losses of $24.55/mt.
Chinese HRC prices tumbled $97/mt (-17%) year-on-year to $471/mt FOB China as of Jan. 17, the lowest value in four years. Despite this decline, China’s HRC exports remain strong thanks to weak domestic demand.
HRC Q235B 5.5mm Hot Rolled Coils In Warehouse – Shanghai – China $/ton – Powered by Commodity Evolution
However, in the first quarter of 2025, a slowdown is expected due to anti-dumping duties imposed by major export markets such as India and Vietnam.
New Export Markets for China
With exports to India and Vietnam under pressure, China is exploring new destinations. The Middle East could become an important market for Chinese steel, although it will face stiff competition from producers in India, Japan, and South Korea.
China’s exports of steel and manufactured goods are expected to remain robust in the first half of 2025, but uncertainty related to global trade could affect performance in the second half of the year.
The Indian Market: Between Surplus Stocks and Expectations of Growth
India, another key player in the region, is facing a slowdown in domestic steel demand due to excess inventories in the supply chain and stagnant exports. In mid-December 2024, the Indian government initiated a safeguard investigation into imports of flat unalloyed and alloyed steel products, fueling uncertainties in the market.
Despite the pessimistic view on prices, the market has hopes for increased government spending on infrastructure, which could be announced in the federal budget on Feb. 1, 2025.
The Long Market in Southeast Asia: A Widespread Slowdown.
In Southeast Asia, billet trade declined significantly at the end of 2024. The volumes of completed contracts dropped dramatically, from 136 in the fourth quarter of 2023 to only 35 in the same period of 2024. The number of registered bids also dropped, although to a lesser extent, from 319 to 281.
In early January 2025, transactions remained limited, with Chinese and Indonesian producers holding prices steady after receiving orders for February shipments. However, the sustainability of demand remains uncertain, with many market participants awaiting a possible rebound in Chinese production post-maintenance.
The Competitiveness of Asian Products in Global Markets
Outside Asia, interest in Asian steel products seems to be waning. Turkish buyers, for example, find Asian imports uncompetitive compared to scrap, which is considered a low-risk alternative. The price difference between CFR Turkey scrap and CFR Southeast Asian billets has increased significantly, from $85-90/mt in September 2024 to about $120/mt in January 2025.
This dynamic reflects broader pressure on the Turkish market, exacerbated by weak European demand. Meanwhile, Asian producers are looking to further diversify their exports, with an eye toward less traditional destinations such as Egypt and South America.
Ferrous Scrap Prices: A Downward Spiral
The Asian ferrous scrap market experienced a sharp price decline in the last quarter of 2024, driven by competitive bids on billets and high inventory levels. The price of Heavy Cast Steel Scrap HMS I/II 80:20 CFR – Taiwan from $331/mt on Oct. 17 to $297/mt on Jan. 10.
Steel Scrap Heavy Casting HMS I-II 80-20 CFR – Taiwan $/ton – Powered by Commodity Evolution
This pressure was further fueled by aggressive bidding for Russian-origin billet, with prices around $465/mt on January 10, 2025. However, as the Lunar New Year approached, there was a slight recovery in Taiwanese scrap prices, supported by replenishment activities.
Billets FOB – Russia $/ton – Powered by Commodity Evolution
Despite the slight increase in scrap prices in some markets, the surplus of sellers over buyers, especially in Vietnam, continues to keep the price outlook under pressure, at least until the end of the Tet holiday.
New Opportunities for Scrap in India and Bangladesh
As steel demand slows in parts of Southeast Asia, emerging markets such as India and Bangladesh are attracting the attention of scrap suppliers. India, in particular, could represent a significant opportunity in the first quarter of 2025, thanks to an increase in infrastructure projects planned by the government.
Shredded Ferrous Scrap CFR ISRI 211 – Bangladesh $/ton – Powered by Commodity Evolution
In parallel, in South Korea, some steel mills are exploring the export market for rebar, offering the product at $480/mt CFR Singapore in the second week of January 2025. However, competition remains fierce and profit margins thin.
Outlook for 2025: Between Challenges and Opportunities
Looking ahead, 2025 is shaping up to be a year of transition for the Asian steel market. Key challenges include:
- Global trade tensions: Protectionist policies and anti-dumping duties continue to exert strong pressure on Asian exports.
- Weak domestic demand: In many Asian markets, domestic demand remains stagnant, forcing producers to seek external outlets.
- International competition: China, India, Japan and South Korea compete fiercely for new markets, especially in the Middle East, Africa and South America.
- Transition to sustainability: With an increasing focus on carbon emissions, steel producers are investing in cleaner technologies, but this comes with high upfront costs.
However, there is no shortage of opportunities:
- Economic stimulus: Further stimulus policies in China or other Asian markets could offer demand support.
- Infrastructure: Government investment, especially in India, is a light of hope for the sector.
- Export diversification: Opening up to new markets, such as the Middle East and South America, could mitigate losses in other areas.
In conclusion, the Asian steel market enters 2025 amid much uncertainty, but also with the opportunity to adapt to a changing landscape. The industry will face challenges related to trade tensions and stagnant demand, while taking advantage of opportunities from economic stimulus and infrastructure investment.
The ability of Asian manufacturers to navigate this complex environment will determine their success in the coming years as global markets continue to evolve under the influence of geopolitical, economic and environmental factors.