China’s finished steel exports rebounded strongly in January-February, hitting its highest level on a daily basis since August 2022, China customs data showed March 7. A strong order book for Chinese steel products continued into early 2023, several exporters said, therefore, steel exports are likely to remain high at least in March and the next two months.
China’s finished steel exports rose 49% on the year to 12.19 million mt over January-February, the customs data showed, with daily export volumes rising 18.6% to about 207,000 mt over the same period from December’s average.
Typically, China combines its January and February data to reduce the impact of the week-long Lunar New Year holidays, which tends to fall during these two months and began this year on Jan. 21.
The rise in steel exports over January-February was attributed to an increase in export orders received in November-December when the domestic market was depressed due to an unprecedented COVID-19 wave that swept China, market sources told S&P Global Commodity Insights.
Although some steel exporters said domestic steel demand has gradually picked up since February, with export orders received so far in 2023 still healthy to slightly higher from the November-December period. This, as a result of strong overseas demand, suggests that export shipments will remain robust at least over March-May.
“Export orders have been good lately for products such as HRC [hot-rolled coil], CRC [cold-roll coil], HDG [hot-dipped galvanized steel], as well as billet and slab,” one exporter said, adding that the profit margins for HRC exports were about $14-$22/mt higher than in the domestic market.
European and Turkish orders for Chinese steel products have improved following supply disruptions caused by the earthquake in Turkey in early February, some exporters said. Lately, Russia’s invasion of Ukraine also caused Europe to turn to China for slab orders.
However, the import of finished steel over January-February dropped 44.2% on the year to 1.231 million mt. The daily import of finished steel slumped to the lowest level since 2002, according to data compiled by S&P Global.
The decline in steel imports was within market expectations due to the disruption caused by COVID-19 on China’s economic activity in late 2022. Although steel imports may gradually improve in early 2023, most market sources expected limited upside in growth of imports as China’s property debt woes will continue to undermine the country’s steel demand in 2023.
Given the opposing direction taken by China's steel exports and imports, the country was a net exporter of finished steel exports over January-February at 10.959 million mt, soaring 83.4% on the year, the customs data showed.
