China’s March steel exports rise to four-year high

Posted on 13 April 2021

Chinese steel exports hit a four-year high in March as mills shifted sales overseas after domestic prices weakened. But the threat of a tax hike is expected to reverse the trend.

March steel exports rose by 16.5pc on the year to 7.54mn t, the highest level since March 2017, according to China customs data. January-March exports rose by 23.8pc to 17.68mn t.

The March exports were higher than the average of 5.07mn t during January-February. China's general administration of customs combines January and February data to smooth out the effects of the lunar new year holiday.

Most March steel export shipments were spot orders taken in late December and January 2021 when China's steel prices were falling during the seasonally weak winter period ahead of the mid-February lunar new year holiday.

Shanghai rebar ex-warehouse prices fell by 340 yuan/t ($47/t) to Yn4,290/t from 23 December to 31 January 2021. But steel demand from overseas markets remained strong and supported a slight increase in Chinese export prices. The Argus rebar export index increased by $5/t to $610/t fob Zhangjiagang theoretical weight over the same period. Chinese mills actively accepted export orders during the winter lull in domestic demand.

China's steel exports might slow from April, after the threat of a tax rebate cancellation began to curb spot trade during February-March. Chinese domestic steel prices also rebounded sharply from late February, dampening mills' interest in exports. Shanghai rebar ex-warehouse prices assessed by Argus increased by Yn740/t, or 17.2pc, to Yn5,030/t from 16 February to 6 April 2021, their highest level since the assessment began in April 2018.

"China's long steel exports are likely to witness a sharper decrease than flat steels as buyers have more options for lower-priced rebar and wire rod from Turkey, Russia and India," a north China producer said.

Chinese spot trade for flat steels has picked up over the past week, as tight supplies and China's discount have overcome the tax threat.

The Chinese hot-rolled coil (HRC) export index rose by $174/t, or 25pc, to $865/t over 1-12 March 2021 and is still at a discount to offers from Japan and India and prices in the EU and US ex-works prices at above $1,000-1,400/t ex-works equivalents.

China's March steel imports rose by 16pc on the year to 1.32mn t. China imported 2.39mn t of steel over January-February.

Source : Argus