China's steel exports rise 33% y-o-y in Jan-Feb'24

• Subdued domestic sentiments post Lunar holidays lift exports
  
  
• Competitive offers give Chinese mills edge over competitors
  
  

China's steel exports surged in the first two months of 2024, reaching 15.91 million tonnes (mnt). This represents a substantial increase of 32.6% y-o-y compared to the same period in 2023. The reasons the increased exports are as follows:

Slow domestic demand:

Faced with a decline in domestic steel consumption, China ramped up exports, aggressively selling steel at lower prices in international markets, including India. Indian buyers were particularly drawn to China's competitive pricing. Moreover, Chinese market participants were on Lunar New Year Holiday (LNY) from 10 February to 17 February 2024.

Competitive export offers:

In February 2024, China offered its hot-rolled coils (HRCs) for export to the Middle East (ME) at a competitive price of $563/t FOB. The drop in export prices weighed on domestic prices and was also governed by fall in futures. Chinese SHFE HRC Futures fell by RMB 102/t ($14/t) m-o-m reaching RMB 3,858/t ($536/t) on 7 March 2024 against RMB 3,960/t ($550/t) on 7 February 2024. Where as the same went up by RMB 14/t ($2/t) d-o-d against RMB 3,844 ($534/t) on 6 March 2024.

This was significantly lower than India's HRC export offers, which stood at $597/t FOB for the same period. Russia also entered the competition with HRC offers of around $600/t FOB. As a result, ME buyers were attracted towards Chinese prices.

Outlook:

China's steel market is recovering slowly after the holidays. Construction is picking up, but demand is uneven. Supply is increasing to meet demand, but prices might drop due to rising overseas supply and lower regional demand. There are some positive signs, but overall the recovery is expected to remain weak in March 2024.