Shanghai Securities News reports that shrinking international demand and the depreciation of some currencies are pulling down China's steel exports. A similar situation has also occurred in the Iron ore, coking coal and coke sectors.
China's steel export fell to 1.9 million tonnes in January then to 1.56 million tonnes in February down by 49.6% YoY or 18.1 %MoM hitting the lowest levels since November 2005.
However, Mr Li Chuangxin, vice dean of the China Metallurgical Industrial Planning and Research Institute, said that on the contrary, steel imports have surged upwards. China absorbed 0.87 million tonnes of steel products in January and 1.09 million tonnes in February. A rumour spread in the market that China has shifted into a net steel importer in March. In 2008, China shipped out 59.18 million tonnes of steel products or 4.93 million tonnes a month.
Mr Li Chuangxin pointed out the falling exports have attributed to continuously sluggish oversea demand and strengthening trade protectionism. A steep depreciation in currencies in surrounding countries have also weakened China's competitiveness too. The state's main rivals in the Middle East market: Ukraine, Turkey and Russia respectively devaluated their currencies by 40%, 30% and 17%.
The coke industry has suffered a similar plight. China once exported about 1.6 million tonnes in a month, but exports declined to 0.22 million tonnes in December then to 0.07 million tonnes in January and 0.02 million tonnes in February. And, some coke importers, like Japan, have started to dump their imported coke to China, due to the weak international market.
In terms of coking coal, international prices have dropped. At present, the CIF price of coking coal is CNY 100 per tonne to CNY 150 per tonne cheaper than in China. Because of this, over 40 coking coal makers united to purchase their resources.
As for Iron ore, sales from Brazil to China increased by 47% in Q1. Though Brazil suspended 30% of its ore production, the country still suffered an oversupply. Its exports to the EU plunged by 69% in Q1.
China's steel industrial chain is facing the most serious pressure ever. In 2008, China's steel capacity reached 600 million tonnes while the real consumption was only 430 million tonnes.
Source: Steel Guru
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