B2BChina

China's grip on the global raw materials market remains as tight as ever in 2025, despite economic headwinds and geopolitical tensions. For businesses worldwide, this dominance shapes import strategies, influences costs, and forces tough decisions. From steel to lithium, iron ore to rare earths, China continues to be the go-to source for raw materials, driven by its unmatched production capacity, strategic control over supply chains, and competitive pricing. But why does China still hold this position, and how should your business adapt? Let's break it down.

China's Production Powerhouse: Scale and Efficiency

China's role as the world's factory isn't just a catchy phrase—it's a reality rooted in scale. The country produces over 50% of the world's steel, with 2024 output exceeding 1 billion tons, according to industry estimates. This isn't slowing down in 2025, even with a sluggish domestic property sector. Steel mills are running at high capacity, fueled by exports to regions like Southeast Asia and the Middle East, where demand remains strong. On platforms like B2BChina.com, you'll find suppliers offering hot-rolled steel coils at $480 per ton—still a bargain compared to alternatives in places like India or Brazil, where prices hover around $550.

Beyond steel, China dominates in other critical materials. It controls 60% of global lithium processing, essential for EV batteries, and 85% of rare earth element production, vital for tech and defense. This isn't just about mining—China's edge lies in its refining and processing capabilities. For example, while only 9% of the world's lithium is mined in China, 60% is refined there, giving it a chokehold on the supply chain. This vertical integration means Chinese suppliers can offer processed materials faster and cheaper than competitors, even as countries like the U.S. and EU try to build their own capacity.

China's efficiency also plays a role. Decades of investment in infrastructure—think massive ports, rail networks, and industrial zones—mean raw materials move from factory to ship with minimal friction. Compare that to emerging hubs like Vietnam or Mexico, where logistics bottlenecks can delay shipments by weeks. For businesses, this reliability is a big draw, especially when timelines are tight.

Strategic Control: Playing the Long Game

China's dominance isn't accidental—it's strategic. Beijing has spent years securing its position through policies and investments that keep competitors at bay. Take rare earths: China controls 85% of global production, and in 2025, it's tightening export controls on elements like neodymium and gallium, especially to the U.S., amid trade tensions. This isn't new—back in 2010, China restricted rare earth exports to Japan during a diplomatic spat, sending prices soaring. The message is clear: China can and will use its raw material leverage as a geopolitical tool.

The country also invests heavily in foreign resources. Chinese companies own stakes in cobalt mines in the Democratic Republic of Congo, platinum mines in South Africa, and lithium projects in Australia. This ensures a steady supply for domestic needs while giving China influence over global markets. On B2BChina.com, you'll see suppliers offering cobalt at $30 per pound, undercutting Western producers who struggle with higher labor and environmental costs.

Beijing's export controls and subsidies further tilt the playing field. Chinese suppliers often get government support to keep prices low, making it hard for other countries to compete. For instance, magnesium smelters in China can sell at $2,500 per ton, while European producers, burdened by stricter regulations, are closer to $3,000. This price gap keeps buyers coming back, even as tariffs rise.

Economic Realities: Why Alternatives Fall Short

You might wonder why businesses don't just source elsewhere. The answer lies in economics and practicality. Alternative hubs like Vietnam, India, or Mexico are growing, but they're nowhere near China's scale. Vietnam, for example, has become a hotspot for electronics, but its raw material supply chain is still nascent. It relies heavily on Chinese intermediate goods, meaning you're often just adding an extra step—and cost—to your supply chain.

India has potential, especially in steel and textiles, but its infrastructure lags. Ports like Mumbai face congestion, and power outages can disrupt production. A steel shipment from India might take 30 days to reach the U.S., compared to 20 days from China. For businesses on tight schedules, that's a dealbreaker. Mexico, meanwhile, is closer to the U.S., but new tariffs imposed by the Trump administration in February 2025—25% on Mexican imports—have made nearshoring less attractive. A container of steel from Mexico now costs $600 per ton after tariffs, compared to $520 from China, even with U.S. duties.

Then there's the cost of building new supply chains. The EU's Critical Raw Materials Act aims to source 10% of its needs domestically by 2030, but progress is slow. Mining projects in Europe take years to approve, and local opposition often stalls them. Recycling, another EU goal, can't yet meet demand—only 1% of lithium is currently recycled globally. China, meanwhile, has the infrastructure and expertise to keep pumping out materials at scale.

How It Affects Your Import Strategy

China's dominance shapes your import strategy in three key ways: cost, reliability, and risk. Let's start with cost. Chinese raw materials are still the cheapest option for most buyers. On B2BChina.com, lithium carbonate is listed at $15,000 per ton, while Australian suppliers are closer to $17,000. Tariffs add to the bill—U.S. duties on Chinese lithium are now 15%—but even with that, China often undercuts the competition. For businesses, this means you can keep production costs down by sticking with Chinese suppliers, but you'll need to factor in tariff hikes and potential price volatility if trade tensions escalate.

Reliability is another factor. China's supply chain is battle-tested. Even with a weak domestic economy in 2025—real estate investment is down 16% year-on-year—exports remain robust. Iron ore imports, for instance, are set to hit 1.27 billion tons this year, up from 2024, as traders stockpile ahead of new supply from Guinea's Simandou project. This ensures a steady flow of materials, which is crucial if you're running a just-in-time operation. Compare that to Brazil, where Vale's production is flat at 328 million tons, or Australia, where a cyclone in early 2025 disrupted shipments.

But there's a flip side: risk. China's strategic control means it can pull the plug on supply if it wants to. The 2025 export curbs on rare earths are a case in point—U.S. tech firms are scrambling to find alternatives, but options are limited. Canada and Australia are ramping up production, but they're years behind. If your business relies on materials like neodymium for magnets or gallium for chips, you're at Beijing's mercy. Plus, tariffs are a wildcard. The U.S. and EU are pushing de-risking policies, with tariffs on Chinese goods likely to rise further. On B2BChina.com, some suppliers are already adding "export surcharges" to offset these costs.

What You Can Do

So, how do you adapt? First, don't put all your eggs in one basket. China might be the go-to, but diversifying your supply chain is smart. Look at secondary sources like Australia for lithium or Brazil for iron ore. They're pricier, but they reduce your exposure to China's geopolitical whims. On B2BChina.com, you can filter for suppliers with export experience to multiple regions—they're often more flexible if you need to pivot.

Second, lock in prices where you can. With tariffs and trade tensions on the rise, costs for Chinese raw materials could spike. Negotiate long-term contracts with suppliers on B2BChina.com—some offer "price protection" clauses to shield you from sudden hikes. For example, a steel supplier might agree to $480 per ton for six months, giving you cost certainty.

Third, plan for disruptions. If you're sourcing rare earths or lithium, build a buffer stock—China's export controls could tighten further if U.S.-China relations sour. Also, keep an eye on trade news. A U.S.-China economic review due April 1, 2025, could lead to new tariffs or easing of tensions, depending on the outcome.

Finally, consider passing some costs to your customers. If tariffs push your steel costs from $480 to $520 per ton, a 5% price hike on your end product might offset the hit. It's not ideal, but in a volatile market, flexibility is key.

Looking Ahead