Shanghai, Jun. 12 (SMM) - According to China Customs, China’s finished steel exports were 5.23 million mt in May, up 12.0% MoM, and up 9.9% YoY, the second highest level since June 2010. China imported 1.32 million mt of finished steel in May, up 16.8% MoM, and up 3.1% YoY. The significant increases in exports on a monthly basis are mainly due to weak domestic demand and high output. Steelease expects China’s finished steel exports to drop slightly in June due to the following factors.
First, China’s crude steel output was still high in May. Stockpiles and weak demand has added to inventory pressures at steel mills, promoting their enthusiasm in exports. From mid April, domestic steel mills have suspended production, with stocks pressures down.
Second, demand from foreign countries in the Northern Hemisphere is expected to drop with the approach of a low demand period as the weather turns hotter. Meanwhile, the commodity prices are falling amid the depressed global economy, and so downstream enterprises are taking a cautious stance towards purchases, and speculators are also showing low interest in investment. In May, the manufacturing PMI was 51.0% in South Korea. The reading was above 50%, but showed a sign of slowing. The May euro-zone manufacturing PMI came in at 45.1%, down 0.8% MoM. The unresolved European debt issues remain a risk for the economy in the region.
Third, domestic finished steel prices are down, but export prices and ex-works prices are not down significantly, leaving no price advantages compared with prices from the Commonwealth of the Independent States.
Fourth, the anti-dumping and anti-duty investigations launched by Canada, Brazil, and the US have overshadowed the outlook for China’s finished steel exports.