China’s steel exports declined for 4th consecutive months in Sept amid sluggish overseas demand
China’s steel exports declined for 4th consecutive months in Sept amid sluggish overseas demand

China’s steel exports declined for 4th consecutive months in Sept amid sluggish overseas demand

 

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China exported 4.98 million tonnes of steel products in September, sliding by 19% from the previous month, and rising by only 1.3% from the same period last year, hitting the lowest level since May this year, according to data released by the General Administration of Customs.

For the first nine months of the year, China exported 51.21 million tonnes of steel products, falling by 3.4% from a year earlier, showed the data.

In the first four months this year, China’s steel product exports tumbled due to the impacts of the Russia-Ukraine tensions. The exports rebounded to 7.76 million tonnes in May and monthly shipments stayed between 6 – 8 million tonnes in May – August, with year-on-year growth above 20%, staying above the average monthly exports of 5.58 million tonnes in 2021.

Data from the World Steel Association showed that, due to global inflation, monetary policy tightening and economic slowdown in China, the global steel demand is expected to decline by 2.3% in 2022 to 1.797 billion tonne.

Steel demand in developed economies is expected to decline by 1.7% and in particular, steel demand in European Union expected to contract by 3.5% due to high inflation and energy crisis, according to the association.

China is the world’s largest steel maker, with output accounting for more than half of the global total. In the first eight months of the year, China’s crude steel output reached 693 million tonnes, falling by 5.7% from a year earlier. Some 95% of China’s steel output is for domestic consumption, while the other 5% is for exports.

After the Russia-Ukraine tension broke out, energy prices in the international market have climbed, European economy slowed, weakening local residents’ purchasing power, and people shelve plans to buy cars, home appliance, etc, leading to faster-than-expected decline in steel demand, said Zhong Shaoliang, Beijing chief representative of the World Steel Association.

Europe’s steelmakers are forced to cut production amid falling demand and orders, he said.

In August, crude steel output in the 27 countries in the European Union and other European countries reached 13.3 million tonnes, sliding 17.4% from a year earlier, according to the association. In the first eight months of the year, their total crude steel output fell 7.1% on year to 126.3 million tonnes, falling faster than the world’s average.

Chinese steelmakers are mostly active in promoting steel exports as the profit for steel exports are significantly better than domestic steel sales, but they are mostly pessimistic about overseas demand, believing that steel exports will remain under pressure in the near future, according to a report from the China Iron and Steel Association.

China’s steel prices remain lower than overseas prices, though the spread is narrowing. On October 17, the factory gate price of hot-rolled coil in European Union stood at $670 per tonne, sliding 5.6% from the previous week. On the same day, hot-rolled coil prices at China’s Tianjin port stood at $555 per tonne, falling by 2.6% from the previous week, leaving a spread of $115 per tonne, narrowing by 85% from the spread in March this year.