China’s Steel Exports Fall In August, Is Production Finally Slowing Down?

Earlier this year, China promised it would cut steel capacity. However, despite friction with several trading partners, Chinese exports continued to look strong in the first half.

Two-Month Trial: Metal Buying Outlook

China’s Vice Minister of Industry said in July that the country will step up efforts in the second half. The minister pointed out that focus of their work in the first half was mission planning, and in the second half they will step up implementation and enter a new stage, from allocating targets and drawing policies to actually pushing capacity cuts.

Exports Fall in August

Chinese exports decline in August. Source: Customs Dept PRC
Chinese exports decline in August. Source: Customs Dept. People’s Republic of China.

Following those comments, exports started to taper down. In August, China exported 9.01 million metric tons of steel, a year-over-year decline of 7.4%. Other than capacity cuts, the anti-dumping duties that many countries have slapped on Chinese steel products are contributing to this decline.

Is This Good News For US Steel Makers?

Chinese exports were the biggest concern for U.S. Steel companies last year but, thanks to trade cases, Chinese exports are not a real issue anymore. Indeed, China accounted for less than 2% of U.S. imports in July. The decline in Chinese steel exports is a welcome sign for the global steel industry but the real risk now for U.S. makers is rising steel imports from other countries, which have already started to pick up.

Chinese Steel Prices

The price gap between domestic and international prices is wide enough to encourage steel imports from other countries, which is one of the reasons why domestic steel prices are retracing now. As imports start to come from other countries, Chinese prices are what we really need to pay attention to.

MetalMiner Price Benchmarking: Current and Historical Prices for the Metals You Buy

HRC China rose in July and August. Source: MetalMiner Index
Hot-Rolled Coil from China rose in July and August. Source: MetalMiner IndX.

Prices in China held fairlu well in July and August. If prices in China continue to hold well thorough the rest of the year, that should put a floor on the recent decline in U.S. prices. On the other hand, if prices in China weaken, that would have a depressing effect on U.S. prices too. At the end of the day, the supply/demand balance in China will be what determine the fate on U.S. steel prices.

Leave a Reply

Your email address will not be published. Required fields are marked *

Scroll to Top