China likely to become a net steel exporter again in October

China is likely to become a net steel exporter again in October, after being a net steel importer for four consecutive months from June to September. However, the volume of net exports over October-December is

expected to be limited, and unlikely to ease steel supply in the domestic market in the coming winter season, according to data from the China Iron & Steel Association, or CISA.

China imported 2.79 million mt of semi-finished steel products in September, comprising mainly billet and slab, up almost seven-fold on the year, but already down 14% from August, according to China customs data.

When added to finished steel imports, it took China’s total steel imports in September to 5.67 million mt, surpassing the total steel exports of 3.83 million mt.

However, semi-finished steel import volume is expected by market sources to drop sharply in October, as the import orders booked by Chinese buyers in August and September slumped, due to improved overseas

demand, which has reduced the need to sell into the Chinese market, and plateaued Chinese domestic strength.

Meanwhile, CISA foresaw China’s finished steel imports to retreat over October-December as well, to an average of 1.54 million mt/month, after peaking at 2.89 million mt in September.

According to CISA, China’s total finished steel imports in 2020 are likely to increase by 60% year on year to 19.69 million mt.

CISA expected finished steel exports to decrease by 15% year on year to 54.65 million mt in 2020, indicating the monthly exports over October-December would average 4.75 million mt, up 24% from September.

The average net finished steel exports thus are likely to average 3.22 million mt/month in Q4, up 144% from Q3, but still 8% lower on the year.

Some Chinese traders said imports of semi-finished and finished steel will rebound now and then in a foreseeable future, but China is unlikely to be a net steel importer again at least in 2020-2021.

This is because while overseas demand has gradually recovered, China’s stimulus, issued in the first half of 2020 to boost its economy from the pandemic hit, has gradually faded away, some sources said, adding the

Chinese domestic strength therefore is unlikely to largely surpass overseas market again.

— Analyst Jing Zhang