China’s steel juggernaut isn’t taking a rest.
Contributing to a global glut, the country churned out steel at a record daily pace in June, fueling an export boom even as the U.S. and other countries raised walls of punitive import taxes meant to protect their own steel industries. Some of China’s steel-producing rivals say the country dumps steel on global markets at unfairly low prices, a charge that China denies.
Steel exports from China, the world’s top producer, in the first six months of the year hit 57.12 million metric tons, up 9% from a year earlier, according to China’s General Administration of Customs. For June alone, they reached 10.9 million tons, up 23% from a year earlier and 16% from May.
“Despite antidumping duties, Chinese steel is quite competitive,” said Hongmei Li, an analyst at the energy and commodities information provider Platts. “Prices have been recovering quite steadily in general in global markets for the first half of this year, and China has been able to keep comparatively low production cost due to relatively low iron-ore and coke prices against steel scrap.”
Chinese steel production in June averaged a record 2.32 million metric tons a day—around 69.5 million tons in all—according to the National Bureau of Statistics. Rivals can hope that China will tap the brakes soon, making good on a pledge to reduce annual capacity by as much as 45 million tons by the end of this year as domestic demand slows. China has the capacity to produce 1.2 billion tons of steel a year, and it produced about 800 million tons last year, or about half the world total.
Its steelmaking rivals are struggling. India’s Tata Steel Ltd., for example, is trying to offload its U.K. steel operations, driven partly by the global glut. U.S. Steel reported a $1.5 billion loss for 2015 and filed a trade complaint against China, while other U.S.-based steelmakers laid off many workers. The U.S. imposed a 265.79% duty on some Chinese steel, and the European Union and India are among others that have also slapped punitive taxes onto China-made steel.
China’s steel production this year is likely to be down 2% to 3% from last year, but percentage growth in steel-product exports is likely to be in the high single digits from last year’s 112 million metric tons, said Jiming Zou, senior analyst at Moody’s Investors Service.
The production boost early this year was partly fueled by a rise in steel prices on Chinese exchanges, up more than 50% during the first four months of 2016 as speculative trading drove up spot-market prices.
Source: WSJ.com