China's steel exports rise 8% y-o-y in May'23

China's steel exports rose by 8% y-o-y to 8.356 million tonnes (mnt) in May 2023, according to China's General Administration of Customs. For the January-May 2023 period, steel exports were at 36.369 mnt, up 40.9% y-o-y.

Factors behind rising exports:

1. Subdued domestic demand: China's domestic steel demand was low in May and mills were more focused on the export market due to limited buying interest in the domestic market. However, in the current market scenario a sign of recovery can be seen amid rumors of a new policy on home loan downpayment rates. In addition, China's manufacturing Purchasing Managers' Index (PMI) has also showed a growth.

2. Competitive Chinese export prices: China's steel export prices have been very competitive. Monthly average Chinese HRC (SS400) prices were around $567/t FOB whereas Indian HRC (SAE1006) prices were at $599/t FOB and Russian HRCs (SAE1006) were at $613/t FOB in May. China was offering lower prices in the global market compared to other exporting countries which resulted in higher export volumes.

3. Rising crude steel output - During January-April period, crude steel output rose by 4.1% on the year to 354.39 mnt.

Outlook

SteelMint last heard that Chinese mills were sold out in terms of exports till June. However, thereafter, volumes may dip because of two factors. One, output cut pressure on mills and two, shrinking overseas demand as countries still fight inflation amid shrinkage in purchasing power.