Posted on 08 Mar 2022
China's finished steel exports totaled 8.23 million tonnes over January-February, declining 18.8% on year, according to the latest statistics from the country's General Administration of Customs on March 7.
China began to release combined trade data for January-February since 2020, to factor out the disruptions to trade caused by the Chinese New Year holiday, which either falls in January or in February each year, Mysteel Global notes.
Consequently, the monthly average of steel exports for the first two months of this year was 4.12 million tonnes, which was the lowest monthly average since October 2020. Beijing has been discouraging the export of commercial grade steel products as part of efforts to reduce domestic carbon emissions from steelmaking, Mysteel Global noted.
However, the new low was still totally unexpected, according to market sources.
"Some steel mills, especially state-owned mills, postponed their shipments to January-February this year, so I thought the volumes were going to improve - at least on month," a steel exporter based in South China commented.
The government's powerful disincentive to discourage steel exports was the finance ministry's removal of the tax rebates on all kinds of steel products in two batches in May and August last year, as reported. But at the same time, major state-owned steel mills were also ordered by Beijing to limit their steel exports last year, as Mysteel Global also reported.
"After a spike of (export) trading last November, actual export transactions dwindled from December onwards, due to the closing gap between Chinese and overseas steel prices," said a Shanghai-based steel analyst who has been closely tracking steel foreign trading. These were the main reasons behind the lows over January-February, she said.
The steel shipments over January-February were mainly to complete the orders signed back in December, according to her.
Steel shipments abroad this month are not expected to be not high either, but some improvement will likely be seen in April and a jump is projected for May as "steel export orders have been robust recently", she said.
The South China exporter echoed this. "Recently, sales have been extremely good, and many buyers are vying to have their orders accepted, especially for hot-rolled coils," he observed.
The robust buying is due in part to the reduction of supply from Russia and Ukraine as a result of the ongoing tension between the two countries, but the trading has been mostly in the hands of foreign steel trading companies who "have been stocking up products to sell them at a later period," he said.
"The end-users who were really buying the products are in Turkey and Africa," according to him.
Source:Mysteel Global
