China Galvanised Plate/Sheet Exports Record a Negative YoY Growth in the First Half of 2022

SHANGHAI, Jun 29 (SMM) - From January to May 2022, China's total exports of galvanized plate/sheet amounted to 3,655,600 mt, while total imports stood at 636,300 mt, equalling to a net export volume of 3,019,200 mt, which fell 16.51% year-on-year.

In details, export volume in January was within the range of 550,000-850,000 mt seen in the past five years, indicating normal market activities in this period. In February, the Chinese New Year holiday, coupled with the Beijing Winter Olympics, resulted in poor operating rates of galvanising companies. And the YTD net export volume fell 15.64% as the domestic export tax rebate was cancelled, and high ocean freight squeezed the export profits. In March, In March, with the resumption of work after the Chinese New Year holiday, operating rates of galvanized plate/sheet enterprises rose. And on the backdrop that raw material prices rose and the export transaction conditions were favourable, galvanized plate/sheet exports increased to 799,300 mt and the YTD net exports fell slightly by 10.45% YoY.

Entering April, overseas geopolitical disputes coincided with the spread of the pandemic in China. Although some overseas orders were re-directed to China, overall orders from Japan, Russia, Ukraine and other countries plummeted. Meanwhile, the domestic market was hit by the spreading COVID in Beijing, Shanghai and Tianjin to varying degrees; the transport of raw materials was hampered in north China such as Hebei and Shanxi. Some galvanising manufacturers in the north and south were forced to stop or reduce the production due to the COVID. At the same time, more ships were assigned for energy transportation amid geopolitical tensions, hence the lack of shipping capacity as well as strict pandemic control measures have pulled down the port efficiency, delaying the delivery of export orders in April. And the YTD net exports of galvanised plate/sheet were less than 80% of the same period last year.  

In previous years, May will see the reduction in galvanising operating rates after the seasonal high in March and April. However, after a quiet market in the first quarter of 2022, backlog export orders were actively delivered in May after the pandemic situation improved. Though the overall exports were still less than in the same period last year, it finally achieved a MoM growth.

Overall, the export market performed poorly in the first and second quarters of 2022 due to a lack of confidence in the market under the influence of recurring COVID-19 pandemic and tightening monetary policies.

Looking into June, the Fed's interest rate hike policy has added bears to the market. According to SMM research, the domestic average price of hot rolled coil fell by 9.1% MoM in June and that of cold rolled coil fell by 8.5%. The traders have been wait-and-see as short-term raw materials prices are still struggling for direction, and some manufacturers even stop the production due to few orders. As such, exports in June will be less than that in May.

In July, ferrous products prices are expected to stop falling with occasional hikes amid macro regulation. The country's support towards export will also stabilise the market sentiment. However, overseas consumption is poor with the absence of a recovery. Galvanised plate/sheet exports are expected to increase limitedly MoM in June-July.

On the macro front, China has been releasing positive signals, the Development and Reform Commission also said that the country has the capability to address the changes beyond expectations in order to achieve the 5.5% GDP growth target. With the end of the off-season for galvanized plate/sheet and the introduction of series of stimulus packages, exports of galvanised plate/sheet are expected to grow more palpably around the end of the third quarter.