China’s steel export volumes were driven by its traditional markets of South East Asia in the first quarter (January-March, 2022). The region led with 4.02 mnt, followed by Middle East and Africa with 2.75 mnt. East Asia followed with 1.96 mnt, and Central and South America, with 1.29 mnt.
Interestingly, Europe was the fifth highest importer of Chinese steel, at 0.87 mnt.
Highlights
Exports to Thailand, Philippines surge m-o-m: In South East Asia, exports to Thailand and the Philippines were up a whopping 97% (0.34 mnt) and 99% (0.39 mnt) m-o-m over February respectively, mainly propelled by billets exports. This was possible mainly because of the absence of the CIS players who are habitually very active in the billets trade. But, because of the Russia-Ukraine war and uncertainties over cargo movement in the Black Sea region, CIS players have been mainly inactive. It may be mentioned Russia and Ukraine jointly hold a share of 22 mnt of billets exports.
Exports to Vietnam rise moderate 12%: Vietnam is traditionally one of the highest importers of Chinese steel and in March, volumes rose a muted 12% to 0.31 mnt against February as users focused more on competitively priced domestic material amid limited allocation from China. Hit by a Covid surge, Tangshan and other areas also went into lockdown which reduced Chinese steel production.
Cheap offers lure UAE buyers: Within the Middle East and East Africa geographies, the UAE showed a 111% spike in imports to 0.19 mnt from China. Competitive offers from China lured UAE buyers.
EU buys substantially: With the Russia-Ukraine war forcing out supply of around 45 mnt of steel, the European Union was desperate to buy from wherever material was available, including China and India. Comparitively cheaper offers thus lured EU buyers. At present, the market is, however, waning, with EU buyers having stocked up on inventory.
Jan-Mar volumes drop y-o-y
China’s steel exports in January-March, 2022 amounted to 13.18 mnt, a sharp 26% drop from 17.68 mnt as per Chinese Customs data maintained with SteelMint.
However, exports rebounded by over 35% m-o-m in March, 2022 to around 4.94 million tonnes against over 3.91 mnt seen in February. On a y-o-y basis, March 2022 exports are down 34% against 7.54 mnt in the same month in 2021. January 2022 exports were at 4.33 mnt.
SteelMint had forecasted that China’s exports in March would be higher compared to January and February.
Outlook
China’s steel exports may slow down in the coming months because of its production cuts, which will continue into 2022. Thus, mills would be forced to focus more on the domestic market as the government injects more stimulus measures to revive an economy just ravaged by Covid.
Moreover, Russia and CIS seem to be testing the waters once more, and at much lower prices which may attract buyers.
There were fresh rumours of a Chinese export tax about a month back although there is no update on this. If this is slapped, exports will surely lessen.
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