China Finished Steel Products Exports to Drop in April 2013

SHANGHAI, Apr. 10 (SMM) - According to China Customs, China’s exports of finished steel products were 5.28 million mt in May 2013, up 24.5% MoM, and up 5.0% YoY. In March, China’s imports of finished steel products were 1.23 million mt, up 36.7% MoM, but down 3.1% YoY.

As earlier expected, China’s finished steel exports in March were up from February’s levels. Steelease understands that the increases in exports are due largely to fewer working days in February for the Chinese New Year holiday and growing demand from the manufacturing industry in preparation for March. China’s exports of finished steel products are expected to hold high in April, but will drop from March, and due mainly to the following four reasons.

First, it is a peak demand period for the manufacturing industry in April. As the weather is getting warmer, operating rates at manufacturing enterprises located in countries in the Northern Hemisphere, and this will boost demand for finished steel products. However, tumbling prices in the domestic steel market after the Chinese New Year holiday will hamper buying interest from foreign traders and downstream producers.

Second, the manufacturing industries in South Korea, India – major export destinations of Chinese finished steel products – remain on a recovery track. In March, the manufacturing PMI in India and South Korea both came in at 52.0%, and the reading for April is expected to stay above 50%. The European manufacturing PMI for March, however, was 46.8%, which stayed on a contraction track. There is low possibility that the European manufacturing PMI is not expected to rise above 50% for the foreseeable future.

Third, export prices of Chinese steel products dropped significantly after the Chinese New Year holiday, but still enjoyed no price advantages compared with prices from the Commonwealth of Independent States (CIS). 

Fourth, most domestic downstream producers will gradually return to markets for purchases after preferring to consume raw material stocks after the holiday. The optimism towards domestic downstream demand may reduce domestic steel mills and traders’ interest in exports.