SHANGHAI, Nov 8 (SMM) - According to data from the General Administration of Customs, in October 2022, China exported 5.184 million mt of steel, a growth of 200,000 mt or 4% from the previous month; the cumulative exports from January to October were 56.358 million mt, a year-on-year drop of 1.8%.

The steel imports totalled 772,000 mt in October, a decrease of 119,000 mt or 13.4% from the previous month; the cumulative imports from January to October were 9.115 million mt, a year-on-year decline of 23.0%.

Chinese steel exports rallied on stronger US dollar and the Posco incident

In October, Chinese steel exports rose both on a monthly and yearly basis. The bulls for Chinese steel export market brought about by Russia-Ukraine conflict were fully digested in May and June, after which time the overseas market entered the seasonal low. Affected by factors such as inflationary pressure, the interest rate hikes, as well as the risk of economic recession, the international commodity market was under constant pressure, and downstream demand in Europe, the United States and Southeast Asia remained sluggish. As a result, Chinese steel exports began to fall MoM after peaking in May. The export volume finally rebounded MoM in October after falling for four consecutive months, with a monthly gain of 200,000 mt or 4%. And the reasons are as follows.

First of all, the continuous strengthening of the US dollar in the second quarter has led to the improvement of the domestic export environment in October, and the bargaining space of some steel mills has expanded.

Secondly, South Korea's Posco Steel Plant was affected by the typhoon, which was also one of the factors that contributed to the increase in Chinese steel exports in October. According to SMM, in October, the number of domestic steel mills' HRC export orders rose about 90% month-on-month. In early September, Posco was affected by Super Typhoon Hinnamnor, and the supply in South Korea was in shortage. This not only caused South Korean buyers to increase their imports of Chinese goods, but also diverted South Korea's export orders to Chinese exporters to a certain extent, which has been reflected in Chinese export data in September and October.

Chinese steel imports hit a new low in October

In terms of imports, Chinese steel imports in October fell slightly from September, and significantly year-on-year, hitting a new low since 2006. In October, steel prices in China and abroad fell again, and the market's enthusiasm for importing weakened, which led to a further decline in the import level.

Steel import and export outlook

In terms of exports, according to the latest research by SMM, the export orders received by Chinese steel mills are basically stable in November. Considering that the global inflation pressure has not peaked, the international situation is constantly changing. Coupled with other influencing factors, the overall overseas demand remains weak. SMM expects that Chinese steel exports in November may fluctuate within a narrow range on the basis of October.

In terms of imports, Chinese steel imports have been low in recent years. Considering that the demand for steel imports will gradually weaken due to seasonal factors near the end of the year, SMM predicts that the incremental space for steel imports from November to December may be quite limited, and the import volume will still operate at a low level.