We have covered the growing importance of Chinese exports here several times before, commenting that Chinese producers have been able to get around the government’s ending of the tax rebate of the export of boron steels by replacing boron with other alloying elements, most notably chromium.
This growth shows no sign of abating and the latest September export figures for China show that they exported a record amount during the month with the total of 10.8 million tonnes being nearly 10% higher than the previous highest tonnage. With the year to date figure nearly 30% ahead of last year, 2015 will be a record year with the total very likely to be above 100 million tonnes which will be the first time in history any country country’s exports have crossed this milestone.
The destination of these increased exports is varied. Chinese steel producers have targeted the EU with a 42% increase in shipments to the region with exports to Italy, Spain and Belgium showing particularly high growth levels. Emerging markets have also been targeted with shipments to Africa up 62% and the Middle East increasing by 27% but it is the Indian subcontinent where exports have really taken off with shipments to India growing by 33%, Pakistan up by 86% and Bangladesh increasing nearly six-fold. South Korea remains the most important market by tonnage for Chinese steel but with shipments increasing by a modest 6% it is clear that other, newer markets are being targeted. In contrast to most other countries in the world, by introducing tough anti-dumping measures, the US has managed to limit the flood of Chinese steel into their market, with shipments falling by 28% so far this year.
As we have noted previously, in order to gain tax rebates from the Chinese government, the steel producers in the country routinely add alloying elements to their steel and so far this year an incredible 76% of all Chinese exports are categorised as “alloy” steel. There has been a large increase in many products with HRC and wire rod both increasing by more than one million tonnes but the real growth has been in “alloy HR bars” which have doubled to an astonishing 22 million tonnes in the first nine months of the year. The truth is actually somewhat different as this category has become a bit of a catch-all for Chinese exporters with everything from billets to rebar to genuine alloy bars being included under this heading.
With the WSA forecasting the demand for steel in China will decline by 3.5% this year and another 2% next year, it seems likely that Chinese producers will continue to target export markets and unless excess capacity is drastically reduced within the country, which is not a popular political decision, exports are likely to remain at least at these elevated levels for the foreseeable future.