China's steel exports surge as domestic demand slumps, while aluminium shipments slide due to rising manufacturing and energy sector activity. China produces over half of the world's steel and aluminium, but Beijing has set informal production ceilings to curb overcapacity. Steel production is capped at 1.005 billion metric tons, and output in 2025 is likely to dip below 1 billion tons for the first time since 2019. Weak property construction is blamed for soft steel demand, with mills compensating by exporting more. China's steel exports rose 6.7% in the first 11 months of 2025, and are expected to hit a record high of 117 million tons. Chinese steel is priced competitively against other benchmarks, and exports make sense despite tariffs. Most steel exports go to other Asian countries with limited domestic production. In contrast, China's aluminium exports have fallen 9.2% in the first 11 months of 2025, with production close to the 45 million ton annual cap. Rising prices have given some reprieve to Western smelters, but Beijing's output cap may tighten global supplies further in 2026. The question is whether China's steel sector will follow in aluminium's footsteps. If Beijing limits annual steel production to 1 billion tons, it will depend on how quickly domestic demand recovers. As long as construction remains a drag, steel mills will likely continue to export or lower capacity.
