SHANGHAI, Apr. 10 (SMM) -- According to China Customs, China exported 5.03 million mt of finished steel during March, up 48.4% MoM or 2.4% YoY. The higher MoM growth rate was attributed to better overseas demand in March. China imported 1.27 million mt of finished steel in March, up 50,000 mt MoM, but down 17.0% YoY.
China’s exports of finished steel grew by 1.64 million mt from February and exceeded 5 million mt for the first time since July 2010. Manufacturing sectors are in full swing as the weather turns warmer, helping improve demand for finished steel. Meanwhile, overseas finished steel prices made strong gains, increasing profit margins on Chinese finished steel and stimulating China’s exports of finished steel. Steelease predicts China’s exports of finished steel will remain high in April for three reasons.
First, April is the traditional peak season for manufacturing sectors, so demand for finished steel will remain strong as well. In addition, although European debt crisis is far from being resolved, some progress has been made. Moreover, the US economy is also recovering, which will also help boost demand for steel.
Second, manufacturing sectors in South Korea, India and other major importers of Chinese steel products continue to recover. The purchasing managers' index (PMI) for Indian and South Korean manufacturing sectors was 54.7% and 52.0% respectively in March, and the manufacturing PMI is expected to remain above 50% in April. The PMI for euro zone manufacturing sector was 47.0% in March, and there is little chance the manufacturing sector will continue to contract despite that the PMI was below 50% this month, and market fears over European debt crisis fade gradually as well.
Third, the exchange rate of China’s currency stabilized recently after a wave of drops, and there is low possibility of further, significant appreciation in the near future. In addition, overseas steel mills raised steel prices in recent one month, and export prices for steel products from countries of Commonwealth of Independent States (CIS) registered noticeable rises, which also help improve profits of China’s steel exports and prompt steel mills to increase exports.
However, China’s steel products are still facing anti-dumping investigations initiated by foreign countries, and South Korea also said it will take measures to curb the import of Chinese-made boron-bearing hot rolled coil. Therefore, Steelease believes China’s exports of steel products will not likely continue to grow significantly in the future.