Chinese finished steel exports fall in Aug amid strong domestic demand

The country's steel manufacturers reported a decline in their finished steel exports on both a monthly and yearly basis. In Aug '20 the export volumes stood at 3.68 mn t, down by 12% in comparison with 4.18 mn t in Jul '20. In similar lines, the annual decline was 26% as against 5 mn t in Aug '19.

Also, during the eight months (Jan-Aug) CY '20, the aggregated export volumes stood at 36.56 mn t, down by 19% in comparison with 44.93 mn t in the similar time frame of CY '19.

Reasons for the fall in export volumes-

• Government investments- The Beijing government announced stimulus packages for the infrastructure and housing sectors that have been struggling amid the COVID-19 pandemic. This, in turn, pushed the demand for the finished steel in these sectors. Also, restoration projects were executed in the regions that were hit hard by heavy rains and floods.
  
  
• Supply shortage amid ongoing production curb- The ongoing production curb in the Tangshan region since 31 Aug '20 until 31 Sep '20 has put pressure on the supplies in the market which has limited the manufacturer's allocations for exports.
  
  
• Higher offers lead to limited interest among importers- As per data maintained with SteelMint, the nation's HRC export offers increased by around $40/t and stood at $523/t FoB China in mid-Aug, which was around $478/t FoB basis a month ago. Thus, higher export offers are less likely to attract importers which led to a decline in exports. Meanwhile, the importers had access to materials at competitive prices from other exporting nations.