China's steel exports to end 13 months of continuous rise

In June, China's exports of steel 7.508 million tons, a year-on-year decline of 0.7%, ending the 13 consecutive months of year-on-year upward trend; imports of steel 612,000 tons, down 22.6%. Overall, in June, China's steel still maintains a clear net export trend, net exports of 6.896 million tons, an increase of 1.9%.

In the first six months of this year, China exported 43.583 million tons of  steel, an increase of 31.3%; imports of steel 3.741 million tons, a year-on-year decline of 35.2%; cumulative net exports of steel 39.842 million tons, an increase of 43.9%.

China's steel exports ended 13 consecutive months of year-on-year upward trend, why?

First of all, the global manufacturing PMI (Purchasing Manager's Index) weak downward, external demand is expected to weaken strongly. Data show that in June, the global manufacturing PMI was 47.8%, down 0.5 percentage points in May, 4 consecutive months of decline, 9 consecutive months below 50%, again since June 2020 hit a new low. Sub-regional perspective, the Asian manufacturing PMI ring flat, remained above 50%; Africa manufacturing PMI declined, located near the 50% threshold; European manufacturing PMI and the Americas manufacturing PMI ring continue to dip, continued to run below 50%.

According to JP Morgan global manufacturing PMI report shows that in June, by its monitoring of the world's major countries and regions in the manufacturing PMI index in 5 countries in the manufacturing PMI in more than 50%, less than 1 country in May.

Comprehensive view, high inflation, continued geopolitical conflict, volatile financial markets and the gradual increase in trade barriers and other factors, are continuing to weaken the global economic growth momentum, leading to the intensification of the global manufacturing downtrend, the road to recovery is facing a greater challenge, which for the later stage of our country's exports of steel will form a certain constraint.

Secondly, the overall decline in overseas steel market supply, the rate of decline to expand but maintain a relatively low level. World Steel Association statistics show that in May, the world's 63 countries and regions included in the statistics of crude steel production of 161.6 million tons, down 5.1%. Among them, African crude steel production of 1.3 million tons, up 18.6%; Asia and Oceania  crude steel  production of 119.5 million tons, down 6.0%; the Middle East crude steel production of 4.4 million tons, an increase of 4.3%; North American crude steel production of 9.6 million tons, a year-on-year decline of 3.7%.

Visible, overseas crude steel production as a whole continues to show year-on-year decline trend, the decline rate expanded but maintained a relatively low level. According to statistics, in May, in addition to China, the rest of the world's crude steel production of 71.5 million tons, a year-on-year decline of 1.9%, the rate of decline to expand by 0.3 percentage points.

Again, China's steel export price advantage still exists, but weakened. Since April this year, overseas and China's hot rolled coil products export prices fluctuated. Up to now, China's steel export offer still maintains a certain advantage, but the advantage has weakened. According to Lange Steel Research Center monitoring, as of July 12, India, Turkey, CIS hot rolled coil export offer (FOB) were 590 U.S. dollars / ton, 660 U.S. dollars / ton, 567 U.S. dollars / ton, while China's hot rolled coil export offer (FOB) was 545 U.S. dollars / ton. China's hot-rolled coil export quotes compared to India, Turkey, CIS hot-rolled coil export quotes were lower than 45 U.S. dollars / ton, 115 U.S. dollars / ton, 22 U.S. dollars / ton.

Finally, the export order index of China's steel enterprises is still running in the contraction range. From the point of view of export orders, due to the decline in overseas manufacturing, foreign demand has weakened the trend of China's iron and steel enterprises, although the export order index has improved, but still running in the contraction zone. According to statistics, in June, China's iron and steel enterprises, the new export orders index rebounded 5.6 percentage points, rose to 49.7%, but still below 50%. This will form a certain constraint on the later stage of China's steel exports.

From a comprehensive point of view, it is expected that in the second half of this year, China's steel exports will further increase the pressure, exports or face a decline in the situation, but the possibility of year-on-year growth still exists. On the whole, later China's steel exports will still run at a relatively high level. Imports, China's manufacturing boom is still running in the contraction zone, the demand for steel is relatively stable, later China's steel imports or will continue to remain low.