China’s Steel Sector Faces Crosscurrents as April Iron Ore Imports Surge

The port of Qingdao buzzes with activity as bulk carriers unload iron ore, a scene emblematic of China’s steel industry resurgence. Yet beneath the surface, structural challenges loom large.

The Surge in Iron Ore Imports
China’s April iron ore imports rose sharply amid a recovery in steelmaker profitability, according to trade data and industry analysis. While official April 2025 figures remain unpublished, Q1 2025 trends indicate a 1.1% year-on-year increase in crude steel production to 259 million tonnes, driven by a 5% jump in March output. This uptick, coupled with a rebound in steel exports (up 6.3% to 27.4 million tonnes in Q1), likely fueled demand for iron ore.

The National Bureau of Statistics (NBS) reported that 53% of steelmakers were profitable in March 2025, a stark improvement from just 25% in March 2024. This recovery, supported by steady exports and a pickup in infrastructure spending (fixed asset investments rose 11.5% in Q1), encouraged mills to ramp up production, boosting raw material imports.

Underlying Risks: Overcapacity and Trade Tensions
Despite the near-term optimism, two critical factors cloud the outlook: overcapacity and global trade disputes. By 2025, China’s blast furnace (BF) capacity is projected to exceed demand by 200 million tonnes—15% of total capacity—driving persistent margin pressures. Meanwhile, U.S. tariffs (including a 245% levy on some steel imports) threaten export growth, as highlighted by the Port of Long Beach’s projected 20% cargo decline in H2 2025.

The real estate sector’s slump—investment fell 9.9% in Q1, with new housing starts plunging 24.4%—further limits domestic demand. Analysts warn that April’s production may stagnate near March’s 2.99 million tonnes/day as mills face limited upside amid these headwinds.

Environmental Pressures and the Transition to Green Steel
China’s 2030 carbon peaking target adds urgency to the industry’s structural reforms. High-carbon BF-based steelmaking, which dominates Chinese production, risks becoming obsolete under stricter emissions policies. The NBS report emphasizes the need for technological upgrades and green transformation, though progress remains slow.

Electric arc furnace (EAF) utilization, which relies on scrap metal and emits fewer emissions, has barely recovered from 2024 lows, leaving the government’s 15% EAF production target for 2025 unattainable.

Investment Implications
For investors, the steel sector presents a mixed picture. Near-term momentum in iron ore prices (tracked on the Dalian Commodity Exchange) may benefit miners like VALE and BHP, but long-term risks to Chinese steel demand remain elevated.

Conclusion
China’s April iron ore import surge reflects a cyclical rebound in steel profitability, driven by export resilience and infrastructure spending. However, the sector’s long-term health hinges on resolving overcapacity, adapting to environmental regulations, and navigating trade conflicts. With Q1 2025 GDP growth at 5.4%—bolstered by a 5.9% expansion in the secondary sector—the government’s focus on industrial restructuring and green investment will be critical to sustaining profitability.

Investors should monitor key metrics: iron ore prices, blast furnace utilization rates, and U.S.-China trade developments. While the near-term outlook offers fleeting optimism, the path to sustainable growth for China’s steel industry is fraught with challenges.

Data sources: National Bureau of Statistics (NBS) of China, United Nations COMTRADE, Freight Investor Services.