It is reported that China's steel export shrank largely following after the weakening international demand since last September as affected by the global financial crisis. Steel export continues the downward trend this year with the accumulative drop reached 52% in the first 2 months, while in February the export volume dropped 49.6%YoY or 18.1%MoM tipping the lowest level since November 2005.

 

In a report disclosed April 7th, General Administration of Customs attributed the current soft export market to the following four reasons:

 

1. The weakening global demand. It is predicted that the overall steel demand would drop over 10% in the year of 2009, among them, that of United States would down 11%, while that of EU would drop 15%.

 

2. The emerging protectionism has worsened the export market.

 

3. Many nations are now taking measures to protect their domestic steel industry.

 

4. The currencies' depreciation in the neighboring countries and the high duty on low value added products export are believed to have deepened the export market.

 

The report said the steel industry in China is now trapped in a vicious circle with the feature of Price Drop-Production Suspension-Price Rebound-Production Resumption Price Redrop Production Suspension Again.

 

Steel price started to recover slightly last Nov thanks to the government's stimulus package and mills' production suspension, but the real demand was not return yet, the steel inventory rose dramatically and evidently dragged down the price, and then pushed many small and medium sized mills into production cutback again.

 

(Mysteel.net)