BlueScope Steel has issued a warning that a “significant volume of steel” is being exported from China, flooding both Australian and international markets.

Economists have cautioned that a sustained downturn in China’s property market could significantly affect the Australian government’s finances and the local steel industry. Once a key driver of economic growth, China’s real estate sector began to falter around 2020, following the country’s strict and prolonged COVID-19 lockdowns.

Around this time, President Xi Jinping introduced stringent regulations to curb the nation’s debt-fueled property bubble, leading to the financial collapse of major developers like Evergrande and Country Garden. Unlike Australia, property prices in China have been dropping at their fastest rate in nearly a decade.

Construction activity has also seen a sharp decline, with May’s figures indicating a drop of about 80% compared to the same period four years ago.

“The property sector in China accounts for roughly 30% of its steel consumption,” Commonwealth Bank commodities analyst Vivek Dhar told the ABC. “And since China imports about three-quarters of the world’s iron ore, developments in the property sector have a substantial impact on global iron ore demand and steel consumption.”