SteelOrbis Shanghai
Chinese
slab exports have seen rapid growth since June, compared with the first half of the year. This rise has been fueled by the increasing
production of old converters (such as
Shagang, Jinan Steel and
Laiwu Steel) and also by the
production of new converters (e.g. Anyang Steel). Another contributing factor to the growth in Chinese
slab exports is the sharp drop in flat rolled prices in the Chinese domestic market since July, while the international market continued to remain at a high level. Nevertheless, by the end of August, total
slab exports this year were much lower than the corresponding period of the previous year, down 37.17 percent.
As for the future, there are a number of factors that may affect Chinese
slab exports.
The first is the tax rebate, which has resulted in a remarkable increase in the export quotations of Chinese
slab. Currently, the quotations of the various mills differ greatly, ranging from $420/mt to $470/mt FOB. According to market insiders, the
trading volume has shrunk sharply.
Secondly, it seems likely that supplies of Chinese
slab will decrease in the coming period. Tangshan Steel commenced
production on its medium
plate line in October, while
Shagang is due to start wide heavy
plate production in the current period. Meanwhile, Rizhao Steel will put its hot rolled coil line into
production by the end of November, and both
Laiwu Steel and Jinan Steel have raised their hot rolled
production by a large margin since October. Thus, there will be a gradual reduction in
slab supplies from the above mills.
Last but not least, there are also several converters being put into
production in the current period so as to relieve the insufficient
slab supply. For example, Anyang Steel has just commenced
production on a 150-mt converter recently, while its hot rolled
production line will not commence operations until March 2007. During the intervening period, the
slab which Anyang Steel produces will be supplied to the market. Besides, Kunming Steel has also completed the
construction of a 650,000 mt
slab caster.
Remarkably, the Chinese government is adopting a very strict approach as regards control of steel exports, especially of
semis exports. Insiders in the
China Iron and Steel Association (CISA) have indicated that if
semis exports remain at the current high levels (more than 1 million mt/month), then the government is likely to hike export tariffs further.
Nevertheless, demand is still a major factor in price determination. If the international market maintains its brisk trend in next year's second quarter, then Chinese
semis exports will continue at a high level.