BEIJING (Reuters) -China's steel exports are set to hit an all-time high this year, defying predictions that unprecedented trade barriers would drive down shipments, and threaten to provoke an even fiercer protectionist backlash against the world's dominant producer.

Exports will grow 4% to 9% this year to hit between 115 million and 120 million metric tons, according to forecasts from 11 analysts, all of whom had forecast earlier this year that exports would fall.

Record exports from China, which produces more than half of the world's steel, underscore how its steelmakers and traders need new markets for metal that can no longer be absorbed at home, where consumption peaked in 2020 before the collapse of the property market.

The drive also reflects worry among steelmakers that trade barriers will keep rising. Better to sell as much as possible now, the thinking goes, according to three analysts and a trader who spoke on condition of anonymity given the sensitivity of the issue in China.

But that fear risks becoming self-fulfilling as the export drive reshapes global flows and spurs countries to close off their markets to support domestic steelmaking.

Some 54 tariffs and other trade barriers have been initiated against Chinese steel from 2024, more than the total between 2019 and 2023, according to China Trade Remedies Information. Analysts say more exports will encourage further curbs.

The European Union said earlier this month it would find new ways to curb steel imports. Mexico on Thursday unveiled a plan to raise tariffs on Chinese imports, including steel.

PIVOT, PIVOT, PIVOT

Steel exports last peaked in 2015, before rising trade barriers and a property market boom in China that stoked demand for steel in construction reversed the trend. This time, steelmakers are maintaining exports in part by pivoting to new markets where barriers are lower or nonexistent.

China's largest listed steelmaker, Baoshan Iron & Steel or Baosteel, said last month shipments to emerging markets in the Middle East, Central Asia and North Africa were growing rapidly, forecasting exports of 10 million tons this year.

The country's steel exports to Saudi Arabia, Malaysia and Thailand climbed 24%, 14% and 13% respectively in the first seven months of this year from a year earlier. Malaysia imposed anti-dumping duties on some imports in July.

However, China's exports to major trade partners Vietnam and South Korea, which have also imposed anti-dumping measures, fell by 20% and 10% in the first seven months, respectively, the state-backed China Iron and Steel Association (CISA) said in a note in late August.

"It's such a brutal market for us traders ... Currently there are barely any orders from Vietnam and South Korea ... We have no choice but to develop new markets now," said an east China-based steel trader on condition of anonymity.

China typically exports higher-value steel products, but steelmakers are increasingly turning to less complex products like steel billet - semi-finished blocks of raw metal - because they attract fewer tariffs.

Exports of billet were three times higher in the first seven months of the year from a year earlier, while shipments of steel rebar, used in construction, surged by 77%. Hot-rolled thin wide steel strip, used in manufacturing and frequently subject to tariffs, slumped by 23%, customs data showed.

The pivot to lower-value, unfinished products is dragging down the value of China's exports despite record volumes, said Alexis Ellender, senior lead, dry bulk insights at Kpler.

Steel exports rose 10% by volume in the first eight months of the year but fell 1% in dollar value, customs data showed.

"The increase in semis exports is often a sign that exports are close to peaking. It means semis can be more profitable than exporting finished steel. It shows a market under pressure," said Tomas Gutierrez, head of data at consultancy Kallanish Commodities.

THE PEAK

Rising exports of semi-finished products are also drawing opposition from the Chinese government. Beijing wants steelmakers to add value and is weighing higher export taxes to discourage shipments of lower-value steel.

That plus a new wave of protectionism means exports will likely peak this year, some analysts predict.

"Overseas markets are saturated and trade barriers are proliferating. It won't get any easier to sell overseas," said Gutierrez.

Kpler expects China's steel exports to retreat to between 100 million and 105 million tons in 2026. Three analysts forecast volume to fall slightly below 100 million.

At around 100 million tons, exports would still outrank every country's steel production other than India.

"This year, we have encountered record trade disputes including anti-dumping duties," Baosteel general manager Baojun Liu said in an earnings call last month.

"But as a steel company at the current scale, we must export."