China Steel Exports Continued to Decline in August, While Imports Stopped Falling

SHANGHAI, Sep 8 (SMM) -  According to data from the General Administration of Customs, in August 2022, China exported 6.153 million mt of steel, a decrease of 518,000 mt month-on-month and a year-on-year increase of 21.8%; the cumulative exports of steel from January to August were 46.225 million mt, down 3.9% on the year.

In August, China imported 893,000 mt of steel, up 104,000 mt from the previous month and down 15.7% from the previous year; the cumulative imports from January to August totalled 7.453 million mt, a year-on-year decrease of 21.2%. 

China steel exports extended the fall due to sluggish demand and low cost effectiveness

In 2022, China’s steel export volume reached the year-to-date high in May before it immediately entered a downward channel. In August, the monthly export volume stood at 6.153 million mt. The reasons behind are summarised as follows.

1. The high export volume in May was mainly related to overseas geopolitical instability caused by the conflict between Russia and Ukraine. After consuming the increase in exports in May-June, overseas market entered a off-season cycle. Meanwhile, the inflation pressure increased under the economic downward, combined with the interest rate hikes. As a result, the downstream demand in Europe, America and South-east Asia showed no signs of improvement.

2. China's export of steel had weak competitive advantages in prices. Due to the weak competitive advantage of China's export quotations compared with CIS countries and countries in South-east Asia, overseas consumers tended to give priority to purchasing steel from the above-mentioned countries, thus the domestic steel exports continued to decline in August.  

China steel imports rebounded from a low level in August

In terms of imports, the domestic steel imports in August ended the previous six-month consecutive decline and rallied. It was mainly thanks to the slump in overseas quotations, which significantly narrowed the price difference between China and overseas. As domestic market's enthusiasm for import increased, the import volume of steel rallied.  

Steel import and export outlook

In terms of exports, the overseas demand remained weak under the impact of inflation and geopolitical conflict. According to the latest SMM survey, domestic steel mills still received rare overseas orders in September in addition to the domestic crude steel production control target and export restraint policies. Therefore, it is expected that China steel export will drop slightly in September.

It is worth noting that recently Hyundai Steel and Posco in South Korea were under the influence of Typhoon Hinnamnor, and a source said that this may push up the domestic steel exports to South Korea. SMM believes that due to the weak competitive advantage of China's export quotations compared with CIS countries and countries in South-east Asia, this incident may slightly increase the steel exports, but the overall impact will be insignificant.

In terms of imports, China's steel imports have remained at a low level in recent years. It is expected that the domestic economy will see a strong recovery in the second half of this year, and the consumption and production of various sectors are also expected to be further improved. With the narrowed price difference between China and overseas, steel imports might see more opportunities and are likely to increase slightly in the short term. However, the room for increase will be limited due to the slow recovery of the actual domestic demand.