Steel News September 9 news: Affected by strong domestic prices, China's steel exports in August fell to the lowest in six months, for those overseas competitors complaining about low-cost Chinese steel flock to the international market, this is undoubtedly a breathing space.
However, due to the Chinese government’s continuous efforts to resolve its long-term overcapacity issue, Chinese steel producers may again export surplus production overseas, and thus easily push up the scale of exports. Therefore, the rest of the world may receive such short-term breathing opportunities.
In other respects, China's August trade data released on Thursday showed that crude oil and coal imports increased during the month, while imports of copper, iron ore, and soybeans fell.
China's overall import in August was the first time in the past two years to increase year-on-year, reflecting that domestic demand has recovered slightly with the support of a series of steady growth policies, which has pushed the Chinese economy into a more balanced state.
According to data from the General Administration of Customs of China, the export of steel products in August was 9.01 million tons, down from 10.3 million tons in July.
This is the second consecutive month of decline in exports of steel products, the lowest since exports reached 8.11 million tons in February, but exports from January to August still increased by 6.3% over the same period last year to reach 76.3 million tons.
"This is a good development, but due to the huge excess production capacity and export tax rebate policy, China's steel exports have to drop significantly and there is still a long way to go," said Roberto Cola, vice chairman of the ASEAN Iron and Steel Industry Association.
China’s excess steel production capacity is estimated at about 300 million tons, which is equivalent to three times the 2015 output of Japan, the world’s second largest steel producer. China stated that it will continue its tax rebate policy for steel exporters.
Cola said that the decline in exports indicates that after the anti-dumping duties imposed by the United States, India, and other countries, Chinese steel manufacturers face difficulties.
However, Richard Lu, an analyst at the consulting firm CRU in Beijing, said that the decline in exports was due to the strong domestic steel prices, rather than China’s submission to pressure from other countries.
“We may see that exports in September will be flat or only slightly higher in September as domestic prices may increase further due to seasonal demand and replenishment,” said Lu.
Chinese steel prices have risen by 20% since the end of May due to lower stocks and slower output, as some steel mills were ordered to close.
As of July, China’s goal of cutting 45 million tons of steel production capacity this year has completed 47%.
The G20 leaders promised at the meeting held in China this week to solve the issue of excess steel production capacity. Overcapacity has caused global steel prices to remain low for many years.
Crude oil, coal imports soared
In China's August imports, crude oil imports increased to 32.85 million tons, the second highest level recorded, as the drop in oil prices stimulated buying; coal imports increased by 25% from July.
“Seasonal demand peaks, domestic prices have continued to rise since the beginning of the year, and the government's supply-side restrictions have all led to an increase in (coal) imports,” said a senior coal trader in Beijing.
Imports of other bulk commodities declined, with imports of iron ore falling to 8,772 tons, compared with 88.4 million tons in July - the second-highest monthly record.