The large outflows of hot-rolled coil (HRC), medium plate and coated steel boosted profits for mills that have struggled to make money at home amid a tepid recovery in the Chinese economy. But there have been fewer export orders in recent weeks, three steel traders told Reuters, while domestic prices remain significantly lower than those in Europe. The number of overseas orders in March shrank by between 30% and 40% compared to those in the first two months, according to one steel trader based in eastern China's Shanghai. "Weakening overseas demand is the main reason for decreasing orders from abroad," said Gu Yu, a steel analyst at consultancy Shanghai Metals Market (SMM).
China had in the past exported more than 10% of its
annual production, but shipments declined in recent years as
several countries imposed anti-dumping duties on Chinese steel
products.
Last year, exports reached 67.32 million tonnes, about 5% of
the 1.34 billion tonnes of finished steel produced in the
country. Exports in the first quarter represent 6% of the
period's total domestic output, compared to its share of 4% in
the corresponding period in 2022.
First-quarter exports jumped 53% on the same period of 2022, thanks to tighter supply in Europe, where output shrank 11% last year due to soaring power costs, World Steel Association data showed. February's earthquake in Turkey, Europe's top steel producer, also disrupted supply and logistics, further boosting demand for Chinese steel, the China Iron and Steel Association (CISA) said in a report this month. Chinese steel exports in March rose for a third consecutive month to 7.89 million tonnes, the highest since April 2021, customs data showed. Meanwhile China's mills earned profits of 249 yuan ($36.22) a tonne on shipments of HRC in February, data from consultancy SMM showed. However, export demand looks set to taper off, as looming recessions in many markets dent demand for steel. China is also facing rising competition from Vietnam, said SMM analyst Gu. Meanwhile overseas buyers are holding off placing orders as Chinese steel prices continue to slide on weakening domestic demand, according to one trader and analysts. Spot prices of HRB400E 20mm rebar in Shanghai have fallen 4.7% since March to 4,019 yuan a tonne as of April 17, according to Mysteel data, and mills are losing about 124 yuan per tonne of steel sold. Profits on exports have also contracted, though mills are still making 185 yuan a tonne on HRC this week, according to SMM. ($1 = 6.8738 Chinese yuan) <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC-Global steel output posted sharp falls in many regions in 2022 GRAPHIC-China's steel exports surged over Jan-Mar 2023 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Amy Lv and Dominique Patton in Beijing; Editing by Kenneth Maxwell)
