SMM News: "calculated according to US dollar prices, in June, the average price of imported steel in China was US $759 / ton, while that of export steel was US $911.62 / ton, showing the phenomenon of hanging upside down for the first time." Industry insiders told reporters.
According to the latest data released by the General Administration of Customs, China imported 1.878 million tons of steel in June 2020, an increase of 598000 tons from a month earlier, an increase of 46.7 percent, or 19.5 percent more than the increase in May. From January to June, China imported a total of 7.343 million tons of steel, an increase of 1.52 million tons or 26.1 percent over the same period last year. In June 2020, China exported 3.701 million tons of steel, a decrease of 700000 tons from the previous month, a decrease of 15.9 percent, or 14.5 percent less than the decline in May. From January to June, China exported a total of 28.704 million tons of steel, a decrease of 5.654 million tons or 16.5% over the same period last year. According to US dollar prices, in June, the average price of imported steel was US $759 per ton and that of export steel was US $911.62 per ton.
"judging from the data, the average price of China's steel imports and exports was upside down for the first time in June; the month-on-month decrease in imports and exports led to a decrease in net exports, which hit an all-time low in June." According to industry insiders, according to research data, China's steel capacity accounts for nearly 50% of the world's total capacity, and there is obvious overcapacity in the world's steel industry, which previously accounted for about 40% of the world's total excess capacity. Under the environment of high production capacity, high output and high overcapacity, China's steel exports have always been dominated by net exports. Since the implementation of the supply side of China's iron and steel industry in 2017, China's steel excess capacity has gradually decreased, and the domestic steel market has also improved significantly. Due to the reduction of excess capacity and the rise of domestic prices, the advantage of China's steel exports has gradually weakened, so the net export volume has decreased year by year. However, the sudden sharp increase in China's net steel exports from March to April 2020 may be due to the poor demand for domestic novel coronavirus prevention and control at that time and the initial epidemic situation abroad, which has not yet affected the demand.
The reporter found that in terms of the average price of imports and exports, the average price of exports was lower than that of imports before, but it was upside down in June 2020. It is possible that the average price of import and export is upside down. On the one hand, it may be due to the improvement of the quality of steel exports from China, which drives up the average price of exports. Relatively speaking, the impact of this point is relatively small. Because at present, China's high-quality steel still has a certain degree of dependence on foreign countries, the probability of improving the quality of export resources is small. Moreover, judging from the changing trend of the average price of imports and exports in recent months, the decline in the average price of imports is more obvious; on the other hand, due to the increase of imported low-end resources, it is more likely to reduce the average price of imports.
According to ICRA, an Indian investment information and rating agency, from April to May, India's steel exports increased by 76 per cent to 1.71 million tons, of which nearly 50 per cent went to China, while India's domestic demand shrank 69 per cent over the same period. The export volume of semi-finished products was 1.29 million tons, an increase of 2.81 times, and 78 per cent went to China. ICR said that although India's exports to China increased significantly, exports increased by only 30 per cent, reflecting the "price-for-volume" rescue strategy of Indian steelmakers driven by a sharp drop in domestic demand. In the second quarter, India exported 2.7 million tons of iron and steel products to China, including 1.7 million tons of semi-finished products, 970000 tons of hot-rolled coil, 50, 000 tons of cold-rolled sheet, 286000 tons of pig iron and 106000 tons of ferroalloy. In terms of China's domestic hot coil market, hot-rolled products from India are mainly circulated in East and South China, with brands of S235JR (Q235B), SPHC and C material SAE1006, and the price is about 100 yuan / ton lower than the local mainstream circulation resources.
It is worth noting that the number of billets and rebar imported by China has increased significantly since the second quarter of 2020, which is several times higher than that of the same period last year. Most of these imported steel resources are low-end resources for the purpose of this product, but the price advantage is more obvious. Therefore, a large number of low-cost resources are imported, which reduces the average import price. The biggest difference between this year and previous years is the outbreak of the novel coronavirus epidemic, which caused poor demand in foreign markets, depressed prices and low overall prices.
As we all know, the novel coronavirus epidemic in China was properly prevented and controlled in June, with very few new cases, while the number of new cases in foreign countries is still increasing. In particular, there has been a marked increase in India in Asia, the United States in North America and Brazil in South America. These three regions are the main importers of Chinese steel, the countries with currency advantages and the main importers of iron ore in China. Although some countries and regions are reluctant to recognize the significant negative impact of the novel coronavirus epidemic on their economies, the actual performance cannot be questioned. The economic downturn has led to demand for commodities in foreign markets, with steel and chemical industries bearing the brunt. On the contrary, due to proper prevention and control, China's consumption levels and industrial development have recovered rapidly under the country's macro-deployment.
According to the National Bureau of Statistics, China's pig iron, crude steel and steel output from January to June were 432.68 million tons, 499.01 million tons and 605.84 million tons respectively, up 2.2 per cent, 1.4 per cent and 2.7 per cent respectively over the same period last year. China imported 101.682 million tons of iron ore in June, up 16.8% from a month earlier and 35.25% from a year earlier, just below the all-time high of 102.83 million tons in September 2017. From January to June, imports totaled 547 million tons, an increase of 9.6 percent over the same period last year. "from the changes in steel production and iron ore imports, we can also find that China has a strong demand for steel and a strong demand for steel raw materials. Due to the increase in the import of iron ore, and foreign iron ore production speculation on the impact of the novel coronavirus epidemic is more, but also greatly raised the import price of iron ore. The rising cost and the exuberant demand make the price of steel in the Chinese market high, while the performance of foreign demand is poor, the price is low, and there is a demand to expand external demand. Therefore, the inflow of low-cost resources into China has formed the phenomenon that the average price of China's steel import and export is upside down. " Industry insiders say.
From the point of view of people in the industry, the average price of steel imports and exports is upside down, and low-cost resources flow into China, which will inevitably increase the competitive intensity of market resources and form a certain resistance to the rising trend of the market. At the same time, the increase in imports will increase the domestic steel supply to a certain extent, and the corresponding pressure on steel production will be weakened. Although the quantity is small, it can also restrain the demand for iron ore to a certain extent, so as to reduce the impact of foreign ore prices on the domestic steel market. At present, the epidemic situation of novel coronavirus has not been eradicated, and it still has a certain negative impact on the market. although the domestic demand has been stimulated by various policies and the domestic market has developed greatly, it should not be too optimistic. Through importing resources to stabilize market prices, we should also pay attention to the squeeze of market share, as well as the follow-up space for the development of domestic demand, so as to maintain advantages in order to ensure the long-term and stable development of China's steel market.
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