BEIJING, May 8 (Reuters) - China's steel exports are set

to slump in the second quarter, threatening to exacerbate a

supply glut at home, analysts and traders said, as the trade war

and a wave of protectionism moving in its wake crimps export

markets.

Second-quarter shipments from the world's largest steel

producer and exporter are forecast to fall by up to a fifth from

the first quarter, said eight analysts and traders, who also

expect exports to worsen further later in the year.

That would also leave second quarter shipments lower

than in the same period in 2024.

Steel exports have been hit by a double blow as Washington's

tariffs choke off the transshipment trade, where third countries

resell Chinese steel to the U.S., and top customers like South

Korea and Vietnam impose their own duties to avoid steel then

being rerouted and dumped in their markets.

"It's certain that total exports will slide in Q2," said a

Chinese steel trader on condition of anonymity as they are not

authorised to speak to media.

"One can look at Middle East, Africa and South America as

alternative outlets but the problem is no country can absorb

such a huge capacity."

China's rising steel exports have helped partly offset weak

demand from the battered property sector and any decline will

redirect steel back home, depressing prices, eroding steelmaker

profitability and denting their appetite for inputs like iron

ore.

First-quarter exports hit the highest level since 2016 as

mills rushed to get steel out of the country before the

then-rumoured tariffs were announced.

While the steel industry has long expected near-record

exports to ultimately trigger some backlash, the magnitude of

protectionism unleashed by the trade war between Washington and

Beijing has surprised many.

The Chairman of China's largest listed steelmaker, Baosteel

, said late last month the sector's exports faced

"unprecedented" pressure and more steel left at home would

intensify oversupply.

Overseas orders for a large Chinese exporter fell between

20% and 30% last month versus the month before, according to an

April survey compiled by consultancy Mysteel.

There are also concerns the trade war could spillover into

products heavily reliant on steel, like electric vehicles or

home appliances, weakening the other major source of steel

demand outside the property sector, said Ge Xin, deputy director

at consultancy Lange Steel.

"It takes time for that impact to permeate through into the

upstream steel market, likely reflected in data in the second

quarter when home demand seasonally slowed, aggravating the

supply glut situation."

($1 = 7.2251 Chinese yuan)