China's steel exports rise 24% y-o-y in H1CY'24 amid weaker domestic demand

China's steel exports in January-June 2024 (H1) rose by 24% y-o-y to 53.40 million tonnes (mnt) as compared to 43.88 mnt in the same period last year, as per the General Administration of Customs.

In June 2024, the same increased by 16.5% y-o-y to 8.745 mnt against 7.51 mnt in June 2023. However, on m-o-m basis the export volumes decreased by 9% m-o-m against 9.63 mnt, in the previous month.

Competitive export offers

Chinese HRC export offers in June 2024 stood at $522/t FOB compared to $554/t FOB in June 2023. While, cumulative HRC export offers for first six months of 2024 from Japan stood at $574/t, decline of $71/t y-o-y as of $645/t FOB in the same period a year ago. For instance, the average Chinese export offers to Vietnam decreased by $63/t y-o-y in H1CY'24 reaching $569/t CNF Ho Chi Minh City against $632/t in H1CY'23.

Moreover, since April 2024 Indian steel mills withheld their flat steel export offers and prioritised fulfilling strong domestic demand and limited export quotas. This gave steel exporters from China an advantage in markets like the Middle East and Vietnam.

Chinese domestic market sentiments

China's steel mills are struggling with weak domestic demand, this has led them to ramp up exports. However, festive holidays, slow trade, and even extreme weather have further dampened domestic sales. Despite government attempts to stimulate domestic sales, the situation remains challenging.

The depreciation of the RMB against the US dollar has suppressed China's steel export prices. A depreciated yuan has been fetching good realisations even if the export offers have been low.

Outlook

Despite positive y-o-y growth, a small drop in June from May indicates slowdown in short-term. This, coupled with China's domestic steel demand might lead mills to prioritise exports for the second half of the year. Compared to competitors like Japan, particularly in Southeast Asia, Chinese steel remains a competitive option.