Craggs said Chinese steel companies could over time reach a saturation point in China and will start to embark on manufacturing activities overseas.

“The way you can succeed is not necessarily through direct trade, but it would be though indirect trade by investing in the manufacturing of steel in countries along those routes,” added Craggs, who is also the chairman of the Singapore branch of the International Steel Trade Association.

This will in particular help small-to-medium production units in countries along the route, said Craggs who was speaking at the Singapore Iron Ore Forum on Thursday.

—CNBC’s Aza Wee Sile contributed to this article.