As the Asian steel market enters the second quarter of 2025, industry participants are proceeding with caution in light of persistent trade tensions, tariff threats, and protectionist measures. The situation is compounded by falling domestic steel futures in China and significant declines in seaborne steel prices observed in early April.
Amid these challenges, stakeholders are adopting a wary stance, particularly with the possibility of retaliatory tariffs from the U.S.
Asian hot-rolled coil (HRC) prices are projected to decline in Q2 due to the ongoing U.S.-China trade dispute and uncertainties surrounding potential output cuts in China. This comes at a time when export volumes are constrained by high U.S. tariffs and reduced HRC quotas in the European Union.
Mills are now looking for alternative markets to offset these pressures, leading to increased competition, particularly in regions like the Middle East and South America. The oversupply of HRC in China is expected to keep prices low, prompting discussions of production cuts to stabilize the market.
This dynamic has resulted in a widening price gap, with the Platts-assessed spread between CFR Vietnam and FOB China HRC reaching a four-year high. Many buyers in Vietnam have turned to suppliers from Indonesia, Japan, and Malaysia as trade barriers against Chinese exports mount.
Additionally, India’s proposed safeguard duty on steel imports aims to protect its domestic industry, further impacting market dynamics. In the longs sector, Asian billet and long steel prices are under considerable pressure due to an oversupply situation exacerbated by increased Chinese export volumes.
Reports suggest that rebar demand in China has not deviated from seasonal patterns, which has led to price declines. Despite some anticipated fiscal support for infrastructure projects, the overall steel demand remains weak, driven by stagnant home buying activity and a lingering overcapacity in production.
As Asian mills grapple with these market conditions, many are shifting their production strategies to better align supply with the current weak demand, with some opting to explore international opportunities to mitigate losses.