- Iron ore imports up m-o-m as mills raise capacity utilisation
- Drought pushes up coal imports m-o-m in August
- Steel exports may drop, going forward
Morning Brief: China’s steel exports in August 2022 were at 6.15 million tonnes (mnt), a y-o-y increase of 22%, as per data released by the General Administration of Customs.
Over January-August, 2022, the country’s steel exports were at 46.23 mnt, a y-o-y decline of 4%.
On a m-o-m basis, exports of the same were down 7% against 6.64 mnt in July, 2022.
This decline is due to several reasons. One, globally demand is subdued amid high energy prices and sliding currencies. Two, the volumes are in keeping with China’s overall policy to stress less on commercial grades for exports and focus more on value-added instead.
But the volumes in absolute terms are sustaining possibly on account of a surge in Covid cases which has kept domestic demand subdued. That apart, the domestic real estate market has been performing poorly, contributing to lesser demand for steel and creating a case for sustaining exports.
But, going forward, steel exports are likely to see a drop, in keeping with the government’s policies.
Steel imports: In August, China imported 893,000 tonnes (t) of steel, a y-o-y drop of 16%.
In January-August, 2022, steel imports also showed a decline of 21% to 7.45 mnt steel.
Iron ore imports: China’s imports of iron ore and concentrates in August 2022 stood at 96.21 mnt, a y-o-y dip of 1.3%. On a m-o-m basis, however, iron ore imports rose 5% in August against 91.24 mnt in July, 2022.
Over January-August, 2022, imports of this key steel-making raw material was at 722.92 mnt, inching down 3% y-o-y.
The m-o-m rise in iron ore imports is primarily on account of higher capacity utilization rates of steel mills. The average daily finished steel output of CISA-affiliated mills rose 4.31% m-o-m in August.
Coal imports: The country’s coal and lignite imports in August touched 29.46 mnt, a 5% rise y-o-y. In July, its coal imports were at 23.52 mnt, thus August saw a m-o-m increase of 25%.
From January-August, 2022, China’s coal and lignite imports were at 167.98 mnt, a y-o-y decrease of 14.9%.
However, China has been labouring under rising energy prices, like elsewhere in the world and its thermal coal imports may rise in the medium term.
The country experienced a record heat wave this summer which led to increased power demand. However, the drought led to a drop in its hydro-electricity generation, putting extra pressure on its coal-fired generation. Many factories are being asked to shut shop temporarily to tide over the power crisis.
As per a report, there are around 1,100 coal-fired utilities in China and if many of these increase their capacities, then there can be an exponential increase in thermal coal imports. Around 60% of China’s power demand is met from coal-fired generation. A media report indicated that China’s coal imports from Russia hit a record 7.38 mnt in July, 2022.
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