SHANGHAI, Jul. 11 (SMM) -- According to China Customs, China's steel exports in June were 5.22 million mt, down 10,000 mt compared to the previous month, and up 21.7% YoY. Steel imports in June were 1.10 million mt, down 16.7% MoM and down 8.3% compared to the same period last year. Although domestic steel exports were down 10,000 mt in June compared to May, but they were still the highest since June 2010. Steelease believes exports did not drop due to pallid demand in the past two months, and since steel prices have been falling, which allowed steel plants to increase exports to reduce inventories. Steelease predicts China's steel exports in July should remain high.
Despite some steel plants conducted maintenance or cut output during June, crude steel output should stay high, combined with inventories backlogged due to sluggish demand, both steel plants and the market will face supply pressure. Steel plants have increased orders to ease pressure, but due to pallid domestic demand for steel and traders unwilling to purchase, they hope to ease domestic supply pressure by increasing export volume, in line with the Steelease survey of steel plants early in the month. Otherwise, domestic supply surplus will improve, and prices will continue to fall sharply.
Besides, prices will continue to fall during the seasonal low demand period and due to pessimistic domestic demand. As steel exported is delivered in one or two months, steel plants can sign long-term contracts to gain profits while prices are falling.
In addition, EU PMI during June was 45.1%, close to May's level, with pessimistic outlook of euro zone economy. As most countries enter seasonal low demand period, demand for steel will fall. But PMI in India was 55.0% in June, up 0.2% MoM, showing its manufacturing is growing.