'Hwadeuljjak' at Chinese Inner Deformed Steel Pipe Plates... High-Value-Added Steel Also at Top Level [Premium Chinese Products Invasion]

Not Only Basic Products but Also High-Value Steel
China Enters the Global Market

A steel production factory in China.

The steel products pouring out of China to the global market have recently shown a different pattern. China, which mainly targeted low-priced products based on mass production of basic and general-purpose products, has started to introduce high value-added steel products to the world market. Korean steelmakers, already struggling with the flood of Chinese steel products, are facing growing concerns about losing their foothold even further.

According to industry sources on the 29th, Anshan Iron and Steel in China launched large-sized deformation-resistant steel pipe plates used as materials for energy steel pipes in the global market. Xinwei Steel introduced non-oriented electrical steel sheets used in electric vehicles, delivering a significant shock to the related industry. The prices and quality of these products currently do not differ much from Korean products, so their impact on the market is not significant. However, the situation will change if China lowers production costs through full-scale mass production.

An official from the steel industry said, "High value-added steel products still do not have a large price gap between Chinese and Korean products, and considering costs such as customs clearance procedures, there is little incentive to use domestic products," but added, "There is a lack of measures to protect domestic steel when China supplies large quantities to capture the market even in the high value-added special steel sector."

This change in the types of Chinese steel exports is analyzed to be influenced by quality improvement demands from domestic electric vehicle, home appliance, and renewable energy industries, which have affected research and development. Min Dong-jun, emeritus professor of the Department of Materials Science and Engineering at Yonsei University, said, "China's steel production technology has already reached a level similar to Korea's," and added, "Chinese steelmakers are lowering the 'psychological resistance line' of steel-related upstream and downstream companies with low prices and proactive customer responses."

By flooding the global market with even high value-added products, the supply volume of Chinese steel, which accounts for about 50% of the world's crude steel production, shows no signs of decreasing despite concerns over economic uncertainties. China's steel exports, which were 54 million tons in 2020, increased significantly to 91 million tons last year. According to Chinese consulting firm MySteel, China's steel exports this year are expected to reach around 100 to 110 million tons, the highest in eight years since 2016. China's total steel production has maintained around 1 billion tons since 2020. An industry official said, "The Chinese steel industry employs many people and has a significant impact on the regional economy," adding, "Production cuts lead to employment reductions and regional economic contraction, so the Chinese government is unlikely to allow a decrease in supply."