China’s domestic steel market recovered sharply post the COVID-19 pandemic supported by fiscal policies and strong demand from the infrastructure and property sector. The country witnessed a sharp drop in finished steel exports and imports while iron ore imports surged. This situation is expected to continue even in the second half of 2020.
Steel exports at 7-year low
China’s finished steel exports in June dropped 15.9pc to 3.7mn mt from May. According to the preliminary customs data, finished steel exports hit the lowest since February 2013, recording a drop of 30.3pc from the prior year June. China’s steel exports were 4.4mn mt in May 2020 and 5.3mn mt in June 2019.
Exports are expected to remain weak as the slump in global steel demand is expected to continue for a couple of months. Countries that import from China are still struggling with low economic activities due to the pandemic. Domestic steel demand in China has improved driven by increased construction activities and downstream consumption.
In July, Chinese steel export prices remained high amid high domestic prices making them less competitive in Asian markets. Other exporters offered steel at lower prices as they faced weak demand in their respective domestic markets.
Steel imports hit 10-year high
Chinese finished steel imports increased 46.7pc to 1.88mn mt in June from May, however, imports rose sharply by 98.7pc to nearly double from the prior June. According to customs data, China’s imports were the highest since October 2009.
Bullish Chinese domestic market driven by the economic stimulus and rapid recovery post the pandemic boosted imports. Steel imports in China are likely to continue at similar levels in the second half of the year.
Iron ore imports at 33-month high
Iron ore imports surged by 17pc in June to 101.68mn mt from the prior month. Robust demand from blast furnaces in China pushed iron ore imports to a 33-month high. Imports surged by 35pc from June 2019 and moved up from 87.03mn mt in May. Imports from Australia, the largest supplier hit a record high of 46.2mn mt.
During January-June period, China’s steel exports dropped by 16.5pc from the prior year to 28.70mn mt, while steel imports grew 26.1pc from the prior year to 7.34mn mt. Imports of total raw material in the first half of 2020, was 546.9mn mt, up 9.6pc from the prior year period.