Hangzhou CIEC Group: Our outlook for Chinese exports is positive

Thursday, 11 November 2021 17:33:08 (GMT+3)   |   Istanbul
       

SteelOrbis talked to Hüseyin Ocakçı Middle East general manager of Hangzhou CIEC Group Co. Ltd regarding the current situation in Chinese market.

When will the power shortage crisis in China be resolved? Do you believe that, after the recent lowering of electricity prices, the situation will return to normal by the end of this year?

The power crisis has already been resolved. The Chinese government approved a total of 150 million tons of coal production capacity before the heating season, and this is still expected to add new capacity. Meanwhile,the government has made several executive orders such as directly constraining prices and shutting down high energy consuming factories. For now, steam coal at ports is at RMB 1,000/mt, while two weeks ago the price was at RMB 2,700/mt. The production curbs caused by power rationing are easing.

What impact do you expect from the winter crude steel output curbs (especially for the second half of winter starting from January)?

The winter crude steel output curbs are the normal annual reductions. For now, the factories in northern China have maintained a 30 percent production reduction,and the heating season production reduction policy requires factories to maintain the same production until Q1 2022. But with the power crisis over, factories in the south can gradually resume production and so the total crude steel output could increase in Q4 2021.

How do you view the dynamics for China’s semis imports in Q4 and in Q1 next year (positive, negative or stable)?

Due to the plunge in coal prices,  steel mill production costs have been slashed. For now,China can export steel. And this trend is more important now than imports, which are expected to be halted for some time. We have a positive view of the prospects for steel exports from China up to the end of the year.

Will China resort to imports of rebar in your view? If so, for how long and which markets could be the main suppliers?

China can hardly import rebar because Chinese projects require national standards.

How do you foresee China’s steel consumption in H1 2022, taking into account the difficulties of Evergrande? Do you think the Chinese construction market could experience a longer-term recession?

The Chinese construction market is experiencing a long-term recession. For now the real estate companies stopped acquiring land,and the main data show that the China real estate industry is at least 30 percent weaker compare with 2020,and the trend is unstoppable.

What is your view of the coking coal and iron ore price trends? Is the current gap between them the highest possible or not?

The coking coal price is set to decrease sharply, and the current price gap between coking coal and iron ore is the highest.


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