China steel exports fall to record lows as imports gain

China's steel exports fell by 30.3% m-o-m to 3.7 mn t in June, an 8-year low, on the back of robust domestic demand and noncompetitive export prices.

Cumulative export of steel was down by 16.5% y-o-y during Jan-Jun at 28.7 mn t, according to customs data.

In June, China's steel imports doubled to 1.88 mn t. Total Jan-Jun import gained by 26.1% to 7.34 mn t.

Reasons for low export:

• Global steel demand was severely impacted by coronavirus related shutdowns. Auto makers from Europe, Korea and Japan which were major importers of China's slabs underwent a 70% plus shutdown of operations, reducing steel demand and prices.
  
  
• Lower export offers from India, Japan and South Korea in key southeast Asian markets led to China losing competitive edge.
  
  
• The June exports figure is likely a reflection of orders placed in April. Export orders in May and June were also possibly quite weak while there has been an uptick in China's export orders this month. Export volume should remain low during July and August.
  
  
• The relatively quick recovery of China's economy from the corona-virus pandemic-related lockdowns led to robust domestic demand and prices, further increasing China's export prices.
  
  Reasons for surge in import:
  
  
• Steel producers in Southeast Asia, India, CIS, Korea, Japan and South America lifted exports to China over the past few months amid supply glut in these countries.
  
  
• Booking of low-cost steel during Mar-May has led to a surge in China's June imports
  
  
• .It is estimated that the delayed previous orders plus new orders may keep import of steel during Jul-Aug at high levels and possibly even post record highs.
  
  
• For some steel products, prices in China were at times during the last few months around $50/t higher than prices in other major steel producing nations.