Chinese steel exports plunge to 7-month low as global demand slows

BEIJING (Scrap Monster): The trade statistics published by the Chinese Customs authorities indicate that the country’s steel exports plunged to seven-month low in September this year. This is the third consecutive month of decline for Chinese steel exports. The fall in exports is mainly attributed to trade restrictions imposed by world countries and the global slowdown in demand for steel products.

The Chinese steel shipments during September this year totaled 8.8 million metric tons. This is marginally lower by over 2% when matched with the exports of nearly 9 million metric tons during August ’16. The exports were down significantly by over 21% when compared with 11.2 million metric tons of shipment during September last year. The cumulative steel shipments out of the country during the initial nine-month period of the year went marginally higher by 2.4% at 85.1 million metric tons.

According to General Administration of Customs (GAC), the sharp fall in export volume is primarily on account of fall in orders due to trade sanctions imposed by several countries on imported Chinese steel. Recently, the EU had slapped hefty tariffs on Chinese steel after complaints by domestic steel manufacturers. The EU had imposed import duties ranging from 13.2% to 22.6% on hot rolled steel products. Also, duty ranging between 65.1% and 3.7% was imposed on heavy plates. Also, Vietnam had announced investigation into H-section steel imports from China. It must be noted that many other countries including India and the US had earlier implemented trade protectionist measures alleging that Chinese steel products were flooding their markets.

Incidentally, the fall in steel exports is in line with the 5.6% drop in overall exports by the country during September this year. The exports during the initial nine-month period of the year were down by 1.6%.

The official production data released by the World Steel Association states that the total crude steel production by China during August was 68.570 Million tonnes, rising by 3.0% when compared with the production of 66.573 Mt during August 2015. The firm domestic steel prices have resulted in mills ramping up their production during the month of September. The jump in steel production has led to increased iron ore imports by the country during the month. Imports of the steel making raw material jumped higher by 6% month-on-month to 92.99 million tonnes in Sep ’16, which is the highest level so far this year. The cumulative iron ore imports by China during Jan-Sep ’16 were 9.1% higher than the previous year at 763 million tonnes.

Meantime, China Iron and Steel Association (CISA) expressed the hope that domestic steel prices will remain stable during Q4 this year, despite it being a seasonally weak quarter. The Association urged its members to be vigilant in balancing supply and demand during the quarter. Commenting on efforts to reduce steel capacities, the Association stated that China has made great efforts in that regard. CISA noted that the country is on target to curb excess steel capacity by 45 million mt during the current year. The recent merger of Baosteel and Wuhan has helped in optimizing product mix and reducing overcapacity. The country will consider similar restructuring proposals in 2017, it added.