By Anil Mathews
BEIJING (Scrap Monster): The steel shipments out of China in February this year plunged to the lowest level in past three years, said latest statistics released by the country’s General Administration of Customs. The exports declined sharply over the previous month and the year-ago period. The country exported 5.75 million tonnes of steel in February, which is significantly down by 22.5% from the previous month. Also, the Feb ’17 exports were down sharply by over 29% when matched with those during the same month a year before.
The Customs data suggests that cumulative exports during the initial two months of 2017 totaled 13.17 million tonnes, significantly lower by nearly 26% when compared with the corresponding two-month period in 2016. Meantime, imports of steel recorded 17% increase during February this year. The cumulative imports during Jan-Feb ’17 jumped higher by 17.6% from the previous year to 2.18 million tonnes.
According to analysts, the sharp drop in monthly exports should be taken as China’s reply to allegations by US steel producers and other steel producers across the globe that China is dumping surplus steel to overseas markets. The sharp rally in domestic steel market has resulted in increased production by country’s steel mills. The data published by the National Bureau of Statistics (NBS) indicate that the country’s steel output in the first two months of 2017 rose 5.8% from the previous year to total 128.77 million tonnes. The high profits have driven the mills to produce more metal during Jan-Feb ’17. At the same time, the strong prices have led to cut in export volumes.
The sharp rise in steel output is amidst proposed plans to cut additional 50 million tonnes of steel making capacity in 2017. It must be noted that the country had eliminated steel production capacity by more than 65 million tonnes in 2016. As per original plan, China had committed to reduce steel output by 100 to 150 million tons during the period from 2016 to 2020. A work report released ahead of the annual parliamentary session had committed to curb excess steelmaking capacity by slashing around 50 million tonnes this year.
Hebei, the country’s largest steelmaking province has announced that it will close its last “zombie” steel mill by 2018. It plans to shut four such mills during the current year and another four by 2018. The province had earlier stated that it would cut Hebei’s steel and iron making capacity will be cut by 31.17 million tonnes in 2017 and by 49.13 million tonnes by 2020. All steel mills in the cities of Langfang, Baoding and Zhangjiakou will be closed by end-2020. Further, the province plans to build ten specialty steel mills by that time.
Greenpeace had recently questioned the Chinese administration’s claims of capacity reductions achieved during 2016. According to them, 72.48% of the steel production capacity reduction during the year was actually closed down or idle. 26 provinces achieved total reduction of 84.9175 million tons in steel production capacity, out of which 61.545 million tons was idle capacity. According to Greenpeace, the country, in effect, registered net capacity increase in 2016 with a total of ten Chinese provinces increasing their steel operating capacity.