Insufficient external demand, China's steel export fatigue or continued

According to customs data, in March, China exported 4.945 million tons of steel, a year-on-year decrease of 34.4%. From January to March, China exported 13.179 million tons of steel, a year-on-year decrease of 25.5%.
For the sharp decline in steel exports, Wang Guoqing, director of Lange Iron and Steel Research Center, pointed out that this is the result of the high base in the same period last year, the weakening of overseas demand and the rise of export costs under the cancellation of export tax rebates. In the future, this trend may continue.

From the perspective of export base, the supply-demand gap of overseas steel in the same period last year provided market support for China's steel export volume. At the same time, the tight supply expectation under the background of carbon reduction and production control in the domestic industry and the market expectation for the adjustment of export tax rebate policy have promoted the centralized delivery of enterprises, and the export volume of steel has increased significantly month on month and year-on-year. According to customs data, in March 2021, China exported 7.542 million tons of steel, a year-on-year increase of 16.5%, a new high since April 2017.

The international steel market demand is also weaker than that in the same period last year. Since the second half of 2021, foreign steel production has gradually returned to the normal level, the tight supply situation has been alleviated, and the demand for Chinese steel has weakened. At present, the export orders of China's steel industry are in the contraction range. In March this year, the new export order index of iron and steel enterprises surveyed by the iron and steel logistics professional committee of China Federation of logistics procurement was 42.9%, down 4.4 percentage points from February; The new export order index of steel circulation enterprises surveyed by Lange Iron and steel network rebounded slightly in the contraction range, indicating that the demand for steel export orders has not recovered enough. In the foreign supply market, Russia and Ukraine are both important steel producers and net exporters. The conflict between Russia and Ukraine has led to a phased tight supply and demand situation in the overseas steel market, and the number of enquiries for China's steel exports has also increased significantly. However, Wang Guoqing said that due to the uncertainty of the situation in Russia and Ukraine and the market price, and the market is still worried about the later adjustment of export policies, China's steel export orders have not increased significantly.

In terms of the adjustment of export tax rebate policy, the Tariff Commission of the State Council issued policies in April and July 2021 respectively, canceling the export tax rebate of 169 steel products. At present, the export tax rebate of China's steel products has been completely cancelled. The increase of export costs has weakened the price competitiveness of relevant steel products in the international market and restrained exports. Moreover, since March this year, with the scattered and frequent domestic epidemic, the logistics control of many provinces and cities has also affected the port gathering and transportation of some exported steel, resulting in certain restrictions on steel export.
At the same time, in March, China's steel exports decreased year-on-year and increased month on month. According to customs data, in March, China's steel exports increased by 1.037 million tons month on month, an increase of 26.6%. In this regard, Wang Jing, an analyst at Lange Iron and Steel Research Center, said that this was mainly based on the low base under the influence of the Spring Festival in February and the geographical conflict, resulting in a gap in the supply of overseas steel market, and the sharp rise in prices led to the recovery of exports. In Wang Jing's view, the month on month recovery of China's steel exports in March was phased. The sharp rise in overseas steel prices restrained demand, superimposed on the slowdown of global economic growth, and there was still pressure on international steel demand in the later stage.
According to the data released by China Federation of logistics and procurement, the PMI of global manufacturing industry in March was 54.1%, down 0.8 percentage points month on month and 3.7 percentage points year-on-year. In terms of subregions, PMI of manufacturing industries in Asia, Europe, the Americas and Africa decreased to varying degrees month on month. The slowdown of global manufacturing growth is increasing the short-term pressure of economic recovery. Geopolitics, epidemic and international inflation have also led to increased pressure on global economic recovery, and the high operation of overseas steel prices is not conducive to the release of demand. Wang Jing also pointed out that in April, Ukrainian led steel mills successively resumed production and export activities, and the overseas steel supply and demand gap caused by geographical conflict is expected to be repaired to a certain extent.
Recently, the atmosphere of China's steel export inquiry has weakened, adding that China's steel export volume climbed to a new high of 7.973 million tons in April 2021. Lange Iron and Steel Research Center expects that China's steel export volume will continue to decline sharply year-on-year in April.