Chinese steel exports at second-highest peak in 2024. Rise over 20% y-o-y

• Volumes near peak level of 112 mnt seen in 2015
  
  
• Dull home demand, eroded yuan encourage exports
  
  
• Volumes may drop amid Trump uncertainty, dumping probes
  
  

Morning Brief: China's steel exports crossed the 100-million tonne (mnt) threshold in January-December, 2024 (CY'24), clocking 111 mnt, as per data recorded by China's Customs and maintained with BigMint. The volume easily surpassed 2023's 91-odd mnt by a healthy 22%.

The exports are the second-highest ever, playing catch-up with the peak of 112 mnt recorded in 2015.

Country-wise break-up

SE Asia remained the largest steel importer from China in 2024 with volumes rising 25% to 34 mnt (around 27 mnt in CPLY), although on a m-o-m basis, these remained flat. Vietnam saw the steepest y-o-y increase of 38%.

Middle East & Africa saw y-o-y volumes climbing up a healthy 29% to 33 mnt (26 mnt) but the pace slowed towards the year-end with a m-o-m dip of 2%. M-o-m, the UAE and Egypt recorded -26% and -61% declines respectively.

Chinese steel exports to East Asia saw a modest 8% y-o-y and 5% m-o-m growth.

South Asia witnessed a 20% increase in 2024 to 7 mnt (6 mnt) and a steep 79% m-o-m increase. Volumes to India tapered off to mere 1% y-o-y rise and 12% m-o-m.

North America saw a 4% decline y-o-y amid concerns over tariff impositions with the advent of the Trump administration.

Overall, the bulk was contributed by Southeast Asia, Middle East & Africa, East Asia and Central & South America.

Chinese steel exports at second-highest peak in 2024

Factors that boosted China's steel exports in 2024

Mills focus on exports amid sustained slack home demand: The sustained slowdown in domestic steel demand continued through the year, squeezing mills margins and forcing maintenance shutdowns. The slide in real estate sector investments continued. Y-o-y, the decline in property investment was -9.95% on average against -7.98% in 2023. Infrastructure investment growth showed a y-o-y decline to an average rate of 5.19% in 2024 against 7.3% in 2023.

China's steel industry continued to incur losses over January-October, with the cumulative deficit reaching RMB 23.3 billion. However, the loss narrowed compared to the RMB 34.1 billion recorded in the first nine months, as per Mysteel Global. Encouragingly, the Chinese steel sector returned to profitability in October for the first time this year amid slightly improved market conditions as new policies took effect.

However, exports were the mainstay and kept the cash registering jangling. Chinese exporters went in for the kill, although m-o-m the volumes rose a modest 5%. The two back-to-back stimulus packages in September and November saw a spurt in sales and prices but which was short-lived. In fact, the stimulus possibly encouraged mills to increase crude steel production m-o-m in December 2024, which rose almost 2.5% to 78.40 mnt and also accommodated the rising exports.

Predatory prices ensured market share: Chinese mills, to ensure that they had an edge over other exporting countries, in a calculated move, kept their prices lower in comparison. This ensured that markets remained enticed by this predatory pricing. Average export offers for benchmark hot rolled coils fell over12% in 2024 to $519/t FOB as against $593/t in 2023. In comparison, Japanese offers hovered at $545/t FOB ($615/t) in 2024, down 11% but higher than the Chinese tags.

Indian offers, on the other hand, averaged a much higher $569/t FOB with mills existing the market over May-September and again in December last year.

Declined yuan boosts export competitiveness: The yuan lost almost 2% y-o-y in 2024. It averaged 7.201 against the dollar in 2024 compared to 7.078 in 2023. A declined yuan meant more foreign exchange earnings for mills and exporters, boosting export competitiveness.

Outlook

Chinese steel exports are expected to taper off in the medium to long term because of a few reasons. Booster measures can ramp up demand to an extent. Secondly, President Trump's return to the US White House has raised concerns about potential new tariffs and trade disruptions, which could further pressure steel market sentiments in the coming months.

Thirdly, increasing protectionism across the world, as countries move in with legislations to protect their domestic mills and raw material availability, will also put a damper on Chinese steel exports going ahead. Already several anti-dumping probes are under way against Chinese steel dumping. India is also mulling a safeguard measure.