A steel billet is seen on a medium
plate production line at a Baowu Group steel mill in Ezhou, Hubei province,
China June 21, 2023. REUTERS/Amy Lv
BEIJING : China
is set to export the most steel this year since 2016, say analysts, as the
weakening yuan and competitive prices help the world's biggest producer offload
surplus metal due to weak demand at home.
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.
But strong demand
mostly from Asia and Africa is helping keep a lid on stocks and allowing mills
to continue operations.
Steel exports in the first five months were up 41 per
cent 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.
"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 per cent against the
U.S. 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 per cent 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.
"Demand for flat and sectional steel products from
Indonesia has been pretty good in the past few months driven by the building of
factories for projects invested by Chinese companies," said Li Peng, a
purchase director at the International Corporation of the Third Construction
Co. Ltd, a subsidiary of state-owned China State Construction.
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.