China: Steel exports show 15% y-o-y growth in May'24

China's steel exports witnessed a growth of 15.3% y-o-y in May 2024, reaching 9.63 million tonnes (mnt) as compared to 8.36 mnt in May 2023, as per the General Administration of Customs. Driven by price advantages as compared to other countries and relatively sufficient orders from previous bookings, Chinese steel exports in May 2024 continued to show a y-o-y growth trend. Moreover, export volumes went up by 5% m-o-m against 9.22 mnt in April 2024.

In addition, during January-May 2024, exports surged by 25% y-o-y to 44.65 mnt compared to 35.81 mnt in the same period of previous year.

Highlights:

1. Competitive export offers: At present, China's steel export offers are lower as compared to other competitive origins. For instance, China's HRC FOB export offers remained very competitive to $543/t FOB in May. While, Japanese HRC offers were at $568/t FOB. Cheaper export offers from China compared to other exporting origins resulted in higher export volumes from China.

Moreover, in May, Indian steel mills withheld their flat steel export prices and prioritized fulfilling strong domestic demand and limited export quotas. This, along with competitive pricing from China, gave steel exporters from here an advantage in markets like the Middle East and Vietnam.

2. Slow domestic market sentiment: Steel demand in the Chinese domestic market continued to remain slow, potentially leading manufacturers to focus on exporting. Steel demand continued to weaken after the Labour Day holidays (1-5 May), failed to show any signs of improvement. Additionally, volatility persisted throughout the month in the Shanghai Futures Exchange (SHFE) HRC futures contracts.

Outlook

Despite May's continued growth, China's June steel export outlook is uncertain. The recent intensification of trade protectionism from the US and Europe poses a challenge for future Chinese steel exports.

In addition, geopolitical conflicts, uncertainty in economic and trade policies of various countries, debt difficulties and inflationary pressures are still unstable factors that disturb the recovery of the global economy and trade.

However, China's competitive prices may support steel export volumes in the near-future. Market participants are also awaiting Baosteel's price announcement.