China's GE Export registers a Plunge of 34% M-o-M basis in Aug'19

Amid the slowdown in domestic steel demand, China's graphite electrodes exports that have been rising month on month (M-o-M) basis since the start of 2019, have recorded a significant fall in the month of August.

As per the China's latest customs data, country's GE exports for Aug'19 have been recorded at 34,142 tonnes against 51,693 tonnes in previous month of July. Also if we compare the same against Aug'18, the country's electrodes exports have fallen by 8% y-o-y basis. So, what led to fall in Chinese GE exports in August.

The answer for this lies in the fact that the crude steel production from China in Aug'19 shot up by 9.3% y-o-y to 87.3 MnT. Chinese steel mills beefed up production in the August month in anticipation of higher domestic steel consumption over the September-October period which is typically the peak demand season and to boost supply ahead of the implementation of stricter anti-pollution production curbs across key steel-making provinces in the country. With the increase steel output, Chinese GE manufacturers diverted their electrodes for domestic consumption instead of overseas market, leading to decline in its exports during the month.

If we analyse China's country-wise exports during August 2019, the highest exports were made to Malaysia (9,030 tonnes), followed by Turkey (at 3,905 tonnes) and India (at 3,143 tonnes). As per the market sources, due to sanctions on Iran by U.S., the Chinese GE exporters are directing their exports to various middle-east countries and after altering the bill of lading where the origin of shipment is changed at the port, the same is directed to Iran thus making evasion of U.S. sanctions possible. Apart from this, China's electrodes exports to India has also increased in last one year due to the removal of anti-dumping duties on the electrodes imports by India in August 2018.

In first eight months of 2019, i.e. from Jan-Aug, China's GE exports have been recorded at 2,59,673 tonnes against 2,08,692 tonnes in the corresponding period of previous year.