22 July 2025 – The Chinese government announced the launch of a new hydropower project on the Yarlung Zangbo River in Tibet at the weekend. Steel demand in China likely to rise significantly. EU steel producers responsible for increase in Chinese imports. Is the EU preparing for the failure of a possible trade deal with the United States?
Rising demand for steel: China launches new mega-dam project
The Chinese government announced the launch of a new hydropower project on the Yarlung Zangbo River in Tibet at the weekend. The investment volume of the project is expected to total 1.2 trillion yuan (approx. USD 167 trillion) and include 5 dams. When completed, the huge hydropower project will be three times the size of the Chinese Three Gorges Dam and will replace it as the largest dam in the world.
Dam to be three times the size of the Three Gorges Dam
The Three Gorges Dam had already consumed almost 500,000 tonnes of steel just for the construction of the barrages. Experts expect that the construction of the new dam will require well over 1,000,000 tonnes of steel. The infrastructure required to operate such a huge dam is likely to further fuel the demand for steel.
For China’s growing energy needs, green electricity from hydropower is another step forward in getting its CO2 emissions under control in the long term. It also shows impressively that you don’t need the Greens, the left or green-left NGOs to realise such projects.
Iron ore prices rise after announcement, in some cases significantly
Initial reactions to the announcement of the new dam can already be observed on the iron ore market. Iron ore prices jumped by more than 3.5% in some cases on Monday.
China wants to consume steel at home
Western lobbyists should therefore finding it increasingly difficult to argue that China is pushing its excess steel capacity into global markets in an uncontrolled manner. The country itself is ensuring that steel is consumed at home again.
This is also indicated by announcements from the China Iron and Steel Association, which recently announced to introduce stricter measures to control overcapacity and asked the Chinese government for export restrictions on steel slabs.
EU steel makers responsible for increase in Chinese steel imports
And while we are on the subject of overcapacity and steel slabs, a dramatic increase in imports of steel slabs from China has been observed in the European Union for several years. While slab imports accounted for just 1.4% of all steel products imported from China between 2017 and 2021, they jumped significantly from 2022 onwards and are expected to account for around 25% of all steel imports from China in 2025 at up to 1,000,000 tonnes (Source: EUROSTAT, own calculations). The EU steel lobby’s claims that steel from China is flooding into Europe are therefore caused by the domestic steel mills themselves.
Steel slabs are primary materials from which the EU steel mills produce processed products such as hot rolled coil, thereby undermining existing EU trade defence measures. Steel slabs are of almost no benefit to the steel-consuming market.
No trade defence measures for steel slabs in the EU?
However, EU market protection proceedings are sought in vain here, as the slabs exclusively benefit domestic steel mills, while these are increasingly displacing traditional imports and thus undermining the competitiveness of small and medium-sized companies.
EU-US tariff deal: Is the EU preparing for negotiations to fail?
For months, EU Trade Commissioner Maroš Šefčovič has been trying to reach a deal with the US government on the tariffs on EU exports to the United States, which have now been postponed several times. However, as we had already suspected, the EU Commission has manoeuvred itself into a dead end in the negotiations.
Commission shifts blame to the US side
According to media reports, the Commission no longer seems to believe that it will be able to conclude a deal with the United States. Instead, the EU is now preparing for a possible worst-case scenario instead of investing all its energy in the successful conclusion of the negotiations. The fact that the EU negotiators themselves could possibly be to blame for a failure of the talks is, of course, officially denied.
Thorsten Gerber, CEO of the Gerber Group, said today: ‘This is what happens when you let people who have only ever lived in and from politics do business.’
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