Chinese finished steel export volumes increased by 9% m-o-m to 4.40 mn t in Nov ’20 against 4.03 mn t in Oct ’20, as per the recent data released by the General Administration of Customs.
Reasons behind the increase in export volumes:
1. Demand recovery in the overseas market – Major importing nations mainly Vietnam and Pakistan are actively procuring HRC from China owing to demand recovery from second half of this year.
2. Limited export allocations from India- Indian mills have slashed allocations for exports to the extent of 20-30% on robust buying in the domestic market. Hence major importing nations procured HRC from China
3. Uptick in export offers- On an average basis Chinese HRC offers have increased by around $30/t m-o-m in Nov ’20 as per data maintained by SteelMint. Monthly average HRC prices in Nov ’20 was recorded at $545/t FoB China in contrast with a $515/t FoB basis in Oct’20. Limited allocations from India gave Chinese mills an edge to raise offers.
However, yearly Chinese steel export volumes declined by 4% as compared to 4.57 mn t reported in Nov ’20. Also during the period of Jan-Nov’20, the same plunged by 18% to 48.8 mn t
Outlook- The nation’s export volumes are expected to recover in upcoming months on strong buying from major importing nations as the supply gap continues to persist. Also, recovery in overseas demand may lead to further hike in offers.
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