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Exports of Chinese steel in March grew by 2% compared to last year

According to Platts, the export of finished steel to China is expected to drop sharply during May-June, despite recovering in March due to a recovery in domestic demand, but weak export demand due to the coronavirus pandemic, traders say.

Steel imports are likely to continue to grow in the second quarter for the same reason.

Finished steel exports to China increased by 2.35% year on year to 6.476 million tons in March, the highest level since July 2018, customs data released on Tuesday showed. Exports recovered in March after falling by 27% year on year for January-February.

Export in the first quarter was still 16% lower compared to the same period last year and amounted to 14.286 million tons.

Steel imports to China grew by 26.5% over the year to 1.137 million tons in March. In the 1st quarter, imports grew by 9.7% to 3.178 million tons.

As a result, net steel exports to China declined 1.64% year on year to 5.339 million tons in March, and fell 21.33% year on year to 11.108 million tons in the 1st quarter.

Some traders say that a strong export recovery in March was temporary, as factories stepped up efforts to increase exports in March as well as in April to ease pressure from domestic suppliers. China's domestic demand was almost frozen in February, as the country was in a closed position due to the coronavirus pandemic, but its steel production remained high.

Domestic demand in China has been gradually recovering since early March, when the country mainly contained the virus. However, since then the virus has spread all over the world, which has greatly affected export demand.

In addition to weak foreign demand, Chinese steel has lost its competitive edge over other countries such as Russia, Japan and South Korea, which have reduced their export prices to competitive levels in the Asian market, as the pandemic also reduces their domestic demand.

As a result, some traders believe that the monthly export of steel in China may drop to about 3-4 million tons in May-June.