China's steel association urged trading companies on Monday not to ramp up exports to take advantage of soaring global prices, and instead prioritise catering to domestic demand.
Steel prices in Europe have surged after Russia's invasion of Ukraine disrupted logistics, spurred sanctions and boosted energy prices, leading some producers to cut production.
Tighter supply and China's lower prices have created strong overseas demand, Qu Xiuli, vice chairwoman of the China Iron and Steel Association (CISA) told a press conference.
CISA is supported by the government, but does not hold any regulatory authority over the sector.
She urged industry participants to follow government trade policy and not hike exports despite the attractive margins.
"We still hope the industry won't increase exports and will follow government policy to prioritise demand at home," said Qu, adding that China had raised export tariffs for some steel products twice last year.
Steel products exported by the world's top producer of the metal dropped 25.5% during January-March to 131.8 million tonnes from a year-ago period, data from customs showed.
But shipments booked in March significantly increased due to attractive profits, traders told Reuters.
A steel trader with a state-backed trading firm, who declined to be named as he is not authorised to speak to media, said orders of hot-rolled coils from Turkey surged and exports to other European countries also rose.
Top steel producers such as Baoshan Iron & Steel Co Ltd and Hunan Valin have, however, recently pledged to keep their exports in line with government requirements.
First-quarter apparent steel consumption plunged 9.5% on an annual basis, pressured by sluggish downstream consumption in the construction and manufacturing sectors, CISA said.
With an economic growth target of around 5.5% this year, consumption dented in the first half "will only be postponed but not disappear", said Shi Hongwei, deputy secretary general of CISA.
(Reporting by Min Zhang and Dominique Patton; Editing by Sherry Jacob-Phillips)