A steel billet is
seen on a medium plate production line at a Baowu Group steel mill in Ezhou,
Hubei province, China, on June 21, 2023. Photo: Reuters
China is on track to
see its steel exports hit a seven-year high with a weak yuan bolstering the
world’s biggest producer’s order books.
Steel exports in the
first five months were up 41% compared to a year ago, customs data showed, and
traders said they have recently seen improved overseas buying appetite.
Exports for 2023
could easily surpass the 67.32 million metric tons shipped last year, said
three analysts who expect volumes of up to 77 million metric tons.
China’s massive steel
industry has been hard hit by a months-long slump in the country’s huge
property sector, pushing steel prices to three-year lows in May.
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Outlook
But strong demand
mostly from elsewhere in Asia and Africa is helping keep a lid on stocks and
allowing mills to continue operations.
“The most direct
reason is that a weaker yuan is beneficial for exports. Also, [China’s] export
prices are appealing,” said Pei Hao, a Shanghai-based senior analyst at international brokerage FIS.
The yuan has
depreciated almost 5% against the US dollar since the beginning of the year.
Steel exports hit
8.36 million metric tons in May, the highest since September 2016, but the
shipments were worth 27.5% less than the same month a year ago at $7.7 billion,
or an average of $922 per metric ton, shows customs data.
Demand is strong from
Southeast Asia, the Middle East and Africa, said traders, with high energy
costs in many countries making steel production less competitive with China’s
prices.
A pick-up in
construction of China-backed projects abroad after a three-year hiatus due to
Covid travel restrictions also contributed to higher exports.
The strong exports in
the first five months, coupled with lower steel imports over the same period,
helped prevent a rise in inventory at home, even as domestic demand
disappointed.