China will remain a major steel exporter amid the war in Ukraine and sanctions against Russia, says CRU European flat steel analyst Matthew Watkins.
“At the same time, we saw that a lot of Chinese steel is going to Turkey after the devastating earthquake and also to the rest of the world,” he noted at the EUROMETAL regional meeting Nordics in Copenhagen on Thursday attended by Kallanish. “Chinese exports are very high this year.”
According to him, the exports are being driven by three reasons – how attractive a current destination market is, low domestic demand and how price competitive the steel material is. “Chinese mills’ profitability is much better outside China. Previously, it was not the case so much,” he added.
“After the Covid-19 pandemic, due to the Russian-Ukrainian war, Europe has started to buy much more steel from other Asian counties like Japan, Vietnam, Thailand and others,” Watkins observed. “The European quota system was not set up to deal with that new trend.”
It is not a very lucrative business to make steel in Europe at present, and volumes are low, he said. “And the main reason is not the imports from countries outside Europe, but emissions prices for CO2, which have risen and are influencing the market more and more,” he commented.
According to him, in the near future, China will remain a big exporter, not only to Europe. But its production will probably decline because of lower domestic demand and measures by authorities to reduce steel output amid CO2 emissions. “India’s steel exports will grow, on the other hand, because it has a plan to increase production,” he added.
Svetoslav Abrossimov Bulgaria