Steel Exports in October Expected to Slide Slightly

SHANGHAI, Oct. 15 (SMM) - According to China's Customs, China's steel exports in September were 5.15 million mt, up 21.5% MoM, and up 22.3% YoY. Steel imports in September were 1.2 million mt, level with the previous month, and down 9.8% YoY. Steelease believes steel exports increased in September due to the high demand season of manufacturing in the Northern Hemisphere, allowing demand from downstream industry and oversea traders to improve. Besides, prices dropped sharply over the past months. But Steelease predicts China's steel exports in October should slide slightly in October.

First, market concerns over European debt crisis grew as Spain's credit rating was downgraded and Greece's labor union planed to strike. Although US major economic data improved, global economic growth was still sliding. The World Steel Association also downgraded its expectations of global steel demand growth for this and next year.

Second, the exchange rate of yuan rose as US pushed QE3, reaching 6.31, reducing the price advantage of domestic steel exports.

Third, the growth rate of manufacturing activity in China's major steel consumer countries including South Korea and EU continued to fall. The PMI in EU and South Korea in September was 46.1% and 45.7% respectively, down from the previous month's levels. EU PMI had been below 50% for 14 consecutive months. India's September PMI was 52.8%, with the growth rate still low.

Fourth, according to a most recent Steelease survey, the planned export quantity of steel plants in October all fall from September's levels. That shows inventories and sales pressure eased as steel plants conducted maintenance and domestic demand improved. Besides, as domestic steel prices rebounded rapidly in September, oversea traders and downstream enterprises will purchase cautiously. As such, Steelease believes China's steel exports in October should slid slightly.