Recently in July, one of the largest shipments of steel rolls received from China was unloaded at the Valparaíso port in Chile. The negative spotlight fell on the event due to the size of the shipment. Perhaps most significantly, the case reopened long-ignored conversations regarding the need to address Chinese steel exports. Since these steel rolls started unloading, they’ve turned heads. This is particularly important given the recently announced Chinese regulations on steel exports, which are set to come into force on January 1.
Photos taken at the port of Valparaiso document the steel rolls. As the charts below illustrate, China has become by far the biggest player in the global market for steel supplying. As such, this latest shipment marks an end to the flow of Chinese steel that has been heavily condemned and criticized by many countries. The imagery is a humbling brush with reality by reminding us of the complicated web of global trade that these materials are circulating through.
The new rules are intended to clamp down on the harmful cheap steel exports that have sparked retaliation from around the globe. By implementing a licensing system, Chinese authorities hope to exert greater control over steel exports, potentially stabilizing market prices and alleviating tensions with importing nations. If properly finalized, the new rules could lead to dramatic cuts in the amount of steel exported abroad. As countries begin to reconsider their reliance on Chinese goods, they may dramatically redefine trade patterns.
According to industry analysts, these regulatory changes would have a transformative effect on the global steel trade. Other countries are frustrated that the United States lets this cheap steel—often valueless in the countries that make it—flood their domestic markets. To others, this presents an opportunity for long-awaited advocacy of fairer trade. The implementation of imposition licenses would be a way to address too much supply compared to demand more generally.
As we near the end of 2022, stakeholders in the steel industry are eagerly awaiting further developments surrounding these regulations. Importers in various regions, including South America, are particularly attentive to how these changes may affect their procurement strategies moving forward. Perhaps the most important impact these rules will have is outside of China, affecting global pricing and availability.