The Asian scrap metal sector is poised to face a tumultuous start in 2025, coming under pressure from a supply glut of steel exports from China, persistently low steel demand and uncertainty stemming from mounting protectionist measures to safeguard domestic steel businesses.
An ongoing oversupply of steel products is expected to exert continuous downward pressure on Asia's ferrous sector, at least in the first half-quarter of 2025.
China's crude steel production is set to surpass the 1bn t mark again this year as production stood at 850.7mn t across January-October. And it is clear that domestic steel demand in the country has lagged behind supply. China exported 101.2mn t from January-November this year, marking a 22.6pc spike from the same period in 2023. The surge was particularly evident in October, when exports grew by 40.8pc year on year, hitting an eight-year high as Chinese mills sought export markets to relieve domestic sales pressures.
Beijing has announced a series of stimulus measures since late September, but the impact of these measures so far has been limited to cushioning falls in the property market as the recovery in property sales has been largely confined to top-tier cities, and market participants expect any recovery to remain subdued in 2025.
Taiwan
Taiwan's ferrous sector has seen a series of setbacks this year in the form of natural calamities, geopolitical tensions, inclement weather and increased competition from cheap semi-finished steel from Russia, China and Indonesia.
In addition, real-estate demand has been significantly lower since the third quarter of this year after Taiwan's central bank tightened credit controls. The weaker real-estate market has driven many construction companies to suspend or delay their projects, which dented steel and steel scrap demand further.
The ferrous scrap price and demand outlook is mixed, and many participants foresee no improvements even by February or March.
South Korea
South Korean steelmakers have faced significant challenges this year, and the world's sixth-largest steel producer is expected to face persistent headwinds in 2025 on the global economic slowdown, stiff competition from other low-cost steel producers, potential tariffs under US president-elect Donald Trump's second term and rising electricity prices.
South Korea's leading steelmaker, Posco, shut down its No 1 wire rod mill at the Pohang Steel Works in November, after 45 years of operation in response to a the global oversupply of wire rods and intensified competition from low-cost imports, particularly from China.
Hyundai has also shut down its Pohang No 2 plant, which has capacity of 700,000t/yr for long products used in the construction sector.
The closure of these operations, coupled with prolonged low demand, probably will limit South Korean buyers' appetite for steel scrap in the first quarter of next year.
Vietnam
But there is hope for another key Asian steelmaking and consumption hub — Vietnam. Finished steel product sales rose by 15.6pc on the year to 24.5mn t in the first 10 months of this year, while steel exports grew by 6.2pc to 7.1mn t, according to the Vietnam Steel Association. Scrap imports also increased, by 11.7pc on the year, during the period.
Market participants expect domestic construction steel demand to increase next year, driven by government-led infrastructure projects aimed at achieving a GDP growth target of 6.5-7.0pc. On the flip side, Vietnam steelmakers are facing various anti-dumping investigations in other markets, and seaborne steel prices will be under pressure if the Chinese domestic steel market continues to show weakness in 2025.
In addition, the export outlook from China may ease, with more countries introducing protectionist measures to safeguard their local steel industries. Several more countries this year have implemented or are considering imposing anti-dumping duties on Chinese steel products. These include major economies such as Japan, South Korea, Vietnam, the EU, India and Canada.
