Global demand woes laid bare as China struggles to export steel

China’s steel exporters face bleak times as sweeping lockdowns from Europe to Southeast Asia squeeze demand by shutting factories and stifling trade, highlighting the stiff challenge ahead for Asia’s top economy even as it emerges from its own virus-driven disruption.

The world’s biggest steel supplier is struggling to sell material overseas as buyers around the world withdraw from the market. An index of new export orders released Tuesday collapsed, registering its most serious contraction since the aftermath of the global financial crisis.

The dislocation caused by the pandemic has raised the prospects of deep recessions in major industrial economies, punishing the markets China needs to support its trade-reliant factories. Although its steel exports have dropped since swamping the world with excess supply in 2015, they remain substantial. Last year’s 64 million tons top annual output in Gemany, Brazil or Turkey.

“The decline in exports will be pretty sharp,” Linda Lin, analyst at CRU Group in Shanghai, said by phone. “It’s not only that demand and logistics are frozen, but we’ve also seen non-performance of contracts to some regions, so Chinese mills are getting more and more cautious.