China's steel exports rise nearly 15% y-o-y in Oct'22

China's steel exports rose by 15% y-o-y to 5.184 million tonnes (mnt) in October 2022 compared with 4.50 mnt in the same period a year ago, according to China's General Administration of Customs. Exports volumes increased by 4% m-o-m against 4.98 mnt in September.

During the first 10 months (January-October 2022), exports were recorded at 56.36 mnt, down 2% compared with 57.36 mnt in the corresponding period last year.

Factors triggering exports:

1. Dull demand in the domestic market: China's domestic steel demand remained weak during October. Steel prices registered a continuous decline after the Golden Week Holidays (1-7 October 2022) followed by the resurgence of COVID cases, which imposed logistical restrictions impacting buying activities.

For instance, China's domestic HRC prices (4.5-12 mm, 1500 mm; Q235B), exw-Tianjin fell by RMB 80/t ($11/t) to monthly average of RMB 3,880/t ($537/t) in October against RMB 3,960/t ($548/t) a month ago.

2. Price reduction by domestic steelmakers: China's domestic steelmaker, Shagang Steel, lowered rebar prices by RMB 100/t ($14/t), while Baosteel kept prices of hot-rolled coils (HRC) unchanged m-o-m for November sales on the back of subdued domestic demand.

3. Lower export allocations from other nations: Japanese exports in the overseas market continued to remain under pressure due to the impact of typhoon Hinnamnor and periodic renovation of hot-rolled mills (HRM) in the Oita area of the Kyushu steelworks. South Korea's steel production was majorly impacted by the disruption caused by the typhoon Hinnamnor in September. As a result, the two major steel producers reported decline in production and sales during the month. Meanwhile, Indian mills have remained shackled by the 15% export duty on non-alloyed finished steel products since end-May 2022.

All these factors boosted exports from China. Chinese mills remained active in exporting semi-finished (billets and slabs) and finished steel owing to subdued sentiments in the domestic real estate segment.

Outlook
SteelMint expects China's exports to drop in 2022 to 60-62 mnt against 66 mnt in 2021. This is because the Chinese government is discouraging exports of commercial grade steel and focusing on high grade/high value materials instead. Secondly, the country's aggressive decarbonisation drive will ensure that its steel production will be lower than 2021's level of 1.03 billion tonnes, with a pronounced focus on domestic consumption.