Shanghai, Mar. 14 (SMM)-According to latest data from China Customs, China exported 3.39 million mt of finished steel in February, down 9.1% MoM, but up 36.7% YoY. The significant increase on a yearly basis is because of low data in February 2011 due to the Chinese New Year holiday. In February, China imported 1.22 million mt of finished steel in February, up 300,000 mt MoM, and up 19.6% YoY.
In February, China’s finished steel exports dropped 340,000 mt from levels in January, which was in line with Steelease’s earlier forecast. The declines in exports are on one hand being negatively affected by the slowing global economic growth. Meanwhile, China’s steel products have not enjoyed price advantages compared with the Commonwealth of Independent States (CIS) following higher costs, and this is a main reason behind falling exports in February. Steelease believes China’s finished steel exports to rise in March due to the following factors.
First, demand from construction industry in Northern Hemisphere countries will increase in March as the weather turns warmer.
Second, demand from the Europe will not drop significantly, given the easing of Greek debt issues and economic recovery in the Europe.
Third, manufacturing industries in South Korea, and India and other China’s major export destinations are showing a sign of improvement. In February, the manufacturing PMI data in India and South Korea was 56.6% and 50.7%. The reading of PMI in South Korea climbed above 50% after below the boom and bust line for sixth straight month. Meanwhile, the EU manufacturing PMI was 49.0%, a new 6-month high, despite still below 50%.
Fourth, the RMB exchange rate is stable in recent days, with a slow appreciation pace. Fifth, significant price increases of finished steel products from the CIS will favor China’s finished steel exports.
Finally, high inventories in domestic markets from rising crude steel output in February will also encourage producers to increase exports.