Production Cuts Push Up China’s Flat Products Export Offers

Chinese steel industry which has been dealing with chronic overcapacity especially since past one year is undergoing major cutbacks in current year 2016.

The country had planned to cut ts excess production capacity by 45 MnT this year and by 150-200 MnT in next five years. As only 30% of the planned production cut this year has been undertaken so far, the government is now making more strict and serious efforts for the same and its impact can be seen in the form of week-on-week uptrend in flat steel export offers from China.

This week China’s HRC (commercial grade) export offers have registered an increase of USD 10/MT against last week and are assessed at USD 400-410/MT, FoB basis. While its CRC offers (SPCC 1.0mm) are up by USD 15/MT and are being offered at USD 430-435/MT, FoB China.

The controlled supply in the market has resulted in price improvement in country’s domestic steel market which has made Chinese manufacturers to focus more on the domestic market rather than overseas sales.

Last year during same time, China’s HRC prices were hovering in the range 295-300/MT whereas CRC prices were in the range of USD 335-340/MT, FoB China. This shows the improvement in country’s steel prices in last one year.

Given the surge in China’s flat products’ export prices, other countries are also following the trend.

HRC export offers from India are heard to be up by USD 5-10/MT this week. Current offers are assessed at USD 405-410/MT, FoB India. While HRC offers from Japan/Korea are up by USD 10/MT and are at USD 420/MT, FoB basis.

CIS-origin HRC offers are currently assessed at USD 365-385/MT, while CRC offers are at USD 410-415/MT, FoB Black Sea.

HRC Prices as on 30 Aug’16