China's Stainless Steel Exports Decline by 11% in Oct'18 M-o-M basis

According to China's latest customs data, country's stainless steel export have declined by 11.45% in Oct'18 month on month (M-o-M) basis to stand at 278,400 tonnes. In October, exports of most kinds of stainless steel products decreased while stainless strip exports increased to 18,700 tonnes, a surge of 16.37% M-o-M basis.

In the first ten months during Jan-Oct'18, China's stainless steel exports stood at 3.41 MnT, 2.79% higher than the corresponding period last year. However, exports of stainless steel plate/sheet coil went down 1.72% compared to a year ago, amid Indonesia's growing presence that squeezed China's market share in the global stainless steel export market.

China's crude stainless steel capacity is expected to increase by 7.5 million tonnes per year to 44-45 MnT by 2020, although there is some pessimism about mills' utilization rates, according to Zhang Zhifang, chairman of Chinese producer Taiyuan Iron & Steel. Also, the production capacity of cold-rolled stainless steel is anticipated to increase in the short term.

China's stainless steel industry scenario

Capacity utilization of stainless steel plants - both in China and globally - has remained at relatively low levels of 60-70% over the last decade. In comparison, China's overall steel capacity utilization - which takes into account that for carbon and stainless steel - is at 80%, according to Zhang.

China's industry experts believe that the country's stainless steel market is ought to shift toward producing and consuming high-end products, especially those in the 300 and 400 series.

Products from the lower-grade 200 series currently make up about 28% of domestic stainless steel production in China, compared with 52% for 300 series and 20% for 400 series. This is in contrast to consumption pattern in mature markets such as Japan, Europe and U.S. where 200-series products account for only about 1% of consumption, 300-series products make up 50% and 400-series ones about 49%.

However, one group of industry experts in China's stainless steel sector is of the opinion that the growth in global stainless steel production has worsened the shortage of stainless steelmaking raw materials such as nickel, chromium and stainless steel scrap.

As China relies on raw material imports for stainless steel, nickel's current shortage and high prices are restricting the growth of our domestic stainless steel industry. Thus 200-series are likely to maintain the dominance in the Chinese market as it mainly contains manganese instead of nickel. Products in the 400 series usually contain 11% chromium, while 300 series - the most commonly traded segment of stainless steel - contains 18-30% chromium and 6-20% nickel.