China's steel exports bounce back by over 30% m-o-m in Mar'22

China's steel exports rebounded by over 30% m-o-m in March, 2022 to 4.95 million tonnes against 3.62 mnt seen in February.

On a y-o-y basis, March 2022 exports are down 34% against 7.50 mnt in the same month in 2021.

Factors that helped to increase March export volumes

SteelMint had forecasted at the beginning of April that China's steel exports would be higher in March especially since January and February had been dull. These two months had seen domestic demand dulled by decarbonisation goals and the ensuing production cuts, week-long Lunar New Year holidays and the Winter Olympics. It was natural that mills would eye a bigger chunk of the exports market in March, driven by bottomline worries too.

The higher volumes were on account of a few factors:

Dull domestic demand: Domestic demand has been dull on account of a resurgence in Covid cases. A key steel-producing hub like Tangshan had announced a strict lockdown from the third week of March, making mills focus on exports.

CIS absence from market: The Russia-Ukraine war helped China capture a chunk of the billets exports market. With CIS players away, China serviced a substantial portion of the billets exports market, especially to Thailand. Russia and Ukraine jointly hold an export share of around 22 mnt in billets.

Rising export prices: Bottomline worries made Chinese mills look at exports big-time in March. With global export offers rising, fuelled by geo-political conflicts, mills became rather active in exporting hot rolled coils to South East Asia as well as to the UAE, especially towards end-March for the latter.

It may be noted that Chinese average monthly HRC export offers have risen steadily from $768/t FOB basis in January to $817/t FOB in February and then to $879/t FOB in March.

Outlook

Chinese mills may sustain their rising exports volumes in April, lured by the higher prices and home demand dulled by lockdowns. However, if China moves in quickly with an export tax, then exports will lose their edge.