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PrintChina's steel exports have slumped since the beginning of this year due to decreasing foreign demand and the depreciation of some countries' currencies, but its steel imports have continued their increase and are exerting more pressure in the domestic market, according to a recent seminar on steel production and demand.
Li Xinchuang, vice director of China Metallurgical Industrial Planning & Research Institute, revealed that China's steel exports dropped to 1.9 million tons in January, and further to 1.56 million tons in February, down 49.6 percent year on year and 18.1 percent month on month, the lowest monthly export volume since November 2005.
However, China's steel imports exhibited growth momentum, hitting 870,000 tons in January and 1.09 million tons in February. It grew further in March to 1.27 million tons, up 11.2 percent over the previous month. Industry insiders predict that China, for the first time since 2006, saw a net import of steel products last month.
Steel exports played an important role in driving up domestic steel consumption. In 2008, China exported 59.18 million tons of steel, with a monthly average of 4.93 million tons.
Li attributed the fall in exports to persistently faltering demand in the international market and trade protectionism. What's more, sharp depreciation of some neighboring country currencies weakened the competitiveness of Chinese products.
Similar things also happened to the domestic coke, coking coal and iron ore sectors.
China, the world's leading coke exporter, struck a peak of 1.6 million tons in monthly coke exports. However, coke exports stood at only 220,000 tons last December, 70,000 tons in January and 20,000 tons in February. The traditional coke importers, Japan for example, started selling coke to China due to Japan's weak domestic steel demand.
The cost, insurance and freight (CIF) price of coking coal to China now stays at 100-150 yuan lower than the domestic price, stimulating 40 more coking plants to purchase overseas.
The iron ore market has continued to face oversupply pressures despite a 30 percent output cut by Brazilian mines. Brazil has cut iron ore supply to Europe by 69 percent, but increased supply to China by 47 percent in the first quarter.
China's steel production capacity reached 600 million tons last year, higher than the actual consumption of about 430 million tons.
According to Huang Jin'gan, chairman of the China Coking Industry Association, the domestic coke sector also faces an oversupply since only 50 percent of coking plants are now in operation.
Cai Jin, vice chairman of the China Federal Logistics and Purchasing, disclosed that many sectors in the manufacturing industry, such as transportation facilities and general machines, posted rising PMI (purchasing manager's index), which, however, failed to boost PMI for steel. The composite steel prices persistently hit fresh lows in the three months, Cai added.
Statistics showed that China's steels output reached 91.8 million tons in the January-February period, up 3.1 percent over the same period last year.
(www.chinamining.org)
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