- Steel exports from China to hit 65 mnt in 2021 against 53 mnt in 2020
- Govt’s policies will slow down exports in 2022
China is likely to end CY’21 with a 21% growth in its finished steel exports, as per SteelMint’s estimates. Volumes, by the end of the current calendar, may touch over 65 million tonnes (mn t), against around 53.67 mn t seen in CY’20, data reveals. China, the largest consumer of steel, has exported at an average of 5.2 mn t per month so far in the current calendar.
Export volumes in Jan-Nov’21 touched 61.88 mn t, up 26.75% over 48.82 mn t seen in the corresponding period of the previous calendar.
However, with China weakening its exports focus, and volumes steadily falling since Jul’21, Dec’21 may also see a m-o-m drop compared to 4.85 mn t recorded in Dec’20.
It may be recalled that China started rolling out its exports de-focus policy in May’21 with the cancellation of the 13% export rebate on 146 steel items. This was followed by another move effected from Aug’21 that saw the export rebate being cancelled on further 23 products, mainly CRCs, galvanised iron (GI) and silicon steel, that ultimately led to the withdrawal of all export rebates. As a result, China’s exports started dropping steadily m-o-m from Jul’21 onwards.
The above moves were in line with the country’s crude steel production cuts. The export disincentive forced mills, labouring under output curbs, to focus more on the domestic market.
South East Asia largest importer
The largest share of exports in Jan-Nov’21, at 17.80 mn t, has gone to South East Asia, with Vietnam leading the list at 5.26 mn t. This geographical region’s proximity to China ensures a ready market for China. Vietnam not only buys copious amounts for its own infrastructure and automobile segments but also value-adds to redirect to other developed geographies, especially Europe.
Middle East and Africa also bought fairly large volumes in this period, at 11.54 mn t. Saudi Arabia was the largest importer in this region with 1.21 mn t. Saudi Arabia’s Vision 2030 plan is eyeing an economy shifted away from oil, its current mainstay while the One Belt One Road project is China’s trade and infrastructure scheme and would involve heightened infra activity going forward, for Saudi Arabia.
East Asia is the third largest importer at 10.56 mn t. South Korea leads the charts here at 6.81 mn t. This Asian country is expected to see its steel demand recovering to CY’19 levels in CY’21, as per worldsteel, supported by improving exports and investment in manufacturing facilities, residential construction recovery and rise in new ship-building orders.
Central and South America are close behind at 9.10 mn t with the leading share of 2.46 mn t enjoyed by Brazil. This LatAm country’s steel demand continues to grow strongly in CY’21, driven by government stimulus and strong construction activity this year.
In South Asia, Pakistan and India are ranked first and second with 1.32 mn t and 1.08 mn t, respectively.
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Outlook
China’s steel exports are intrinsically linked to its carbon emission goals. With the country issuing strict production cut norms this year, crude steel output over Jan-Nov’21 was at 946 mn t, down 2.6% y-o-y while pig iron production dropped 4.2% to 796 mn t and finished steel was marginally up by 1% to 1.223 billion tonnes.
However, going forward, China aims to restrict commercial grade exports and stress on value-added steel. These would be exported in smaller volumes and thus pollute less but fetch much higher margins, and move China closer to its carbon neutrality goals.
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