China steel exports seen surging to seven-year high as home demand wilts

China Steel

29/06/2023 05:04

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      Steel exports seen rising to 77 mln metric tons in 2023
    

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      Demand strong in Southeast Asia, Middle East, Africa
    

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      Stalled Chinese projects offshore spur steel demand
    

  
    By Amy Lv and Dominique Patton
       BEIJING, June 29 (Reuters) - China is set to export the
most steel this year since 2016, say analysts, as the weakening
yuan and competitive prices help the world's biggest producer
offload surplus metal due to weak demand at home. 
    China's massive steel industry has been hard hit by a
months-long slump in the country's huge property sector, pushing
steel prices to three-year lows in May.
    But strong demand mostly from Asia and Africa is helping
keep a lid on stocks and allowing mills to continue operations.
    Steel exports in the first five months were up 41% compared
to a year ago, customs data showed, and traders said they have
recently seen improved overseas buying appetite.
    Exports for 2023 could easily surpass the 67.32 million
metric tons shipped last year, said three analysts who expect
volumes of up to 77 million metric tons.
    "The most direct reason is that a weaker yuan is beneficial
for exports. Also, (China's) export prices are appealing," said
Pei Hao, a Shanghai-based senior analyst at international
brokerage FIS.
    The yuan has depreciated almost 5% against the U.S. dollar
 CNY=CFXS  since the beginning of the year.
    Steel exports hit 8.36 million metric tons in May, the
highest since September 2016, but the shipments were worth 27.5%
less than the same month a year ago at $7.7 billion, or an
average of $922 per metric ton, shows customs data.    
    Demand is strong from Southeast Asia, the Middle East and
Africa, said traders, with high energy costs in many countries
making steel production less competitive with China's prices.
        A pick-up in construction of China-backed projects
abroad after a three-year hiatus due to COVID travel
restrictions also contributed to higher exports.
    "Demand for flat and sectional steel products from Indonesia
has been pretty good in the past few months driven by the
building of factories for projects invested by Chinese
companies," said Li Peng, a purchase director at the
International Corporation of the Third Construction Co. Ltd, a
subsidiary of state-owned China State Construction.
    The strong exports in the first five months, coupled with
lower steel imports over the same period, helped prevent a rise
in inventory at home, even as domestic demand disappointed. 
    Stocks of five major steel products stood at 15.44 million
metric tons on June 21, the lowest since mid-January, and 30%
lower than the same period a year ago, data from consultancy
Mysteel showed.   
    Steel exports may fall in June but are likely to rise again
in July and August, said two steel traders, noting increasing
inquiries recently from Southeast Asia and South Korea.
    The growing shipments are hurting producers abroad, said
Tomas Gutierrez, head of data at consultancy Kallanish
Commodities.
    "On export markets the impact is very bad. Overseas markets
are already struggling and increased imports in many regions has
forced down local production," he said.
    Steel output in Asia and Oceania fell 6% on the year in May,
according to the World Steel Association.
    India is considering imposing countervailing duties on steel
imports from China, after applying an anti-dumping duty on
stainless steel imports last year.
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The comparison of China's HRC export price and export margin
over May-June    https://tmsnrt.rs/3JzXMnF
The yuan has depreciated almost 5% against the U.S. dollar     https://tmsnrt.rs/3r7XPRm
Total stocks of the five major steel products on the decline
since middle January    https://tmsnrt.rs/3PxIC61
China's steel exports to hit a seven-year high in 2023     https://tmsnrt.rs/431K9Vf
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Amy Lv and Dominique Patton in Beijing; Editing
by Sonali Paul)
 ((Amy.Lv@thomsonreuters.com))