SteelOrbis talked to Yak Yeung from Steelexpress (H.K) Limited regarding current developments and expectations in the Chinese steel market.
Can you tell us about your company?
My name is Yak from China, and we are a trading company with more than 20 years of steel trading business experience. Our markets in the past were mainly Latin America, Southeast Asia, Africa, and the Middle East. But due to some market conditions, we are facing pressure in some markets, so we are trying to develop the Turkish market this time. This is my first time here. We're trying to create some opportunities here to meet new friends and see if we can do some business together.
What are the main products you deal with?
We are selling some special hot rolled coil products, like high-grade products - for example, medium carbon, high carbon, or extremely thin coils, or weather-resistant coils, cut-in-plate, and so on. The second product we're trying to sell is rebar - ASTM grade, European grade, called white rebars, that are normally used in typical markets for projects. You know, some project owners design specifications where they have to use rebars which conform with their required standards - whether ASTM or European standards. The third product we're trying to sell is zinc-coated products or extremely heavy gauge coated products. For example, we sell heavy gauge starting from 0.1 mm thickness, and also we're selling from 4 mm to 6 mm thickness. Other products include galvalume, which is aluminum-zinc coated, zinc-aluminum-magnesium coated coils, and tin plate.
Can you tell us about your sales volumes last year?
Last year, coated products represented 60-65 percent of our business - about 80,000 mt. As for hot rolled coils and cold rolled coils, we're selling about 30,000-40,000 mt. As for beams, we're selling quite well - about 30,000 mt per year.
We also sell special pre-painted material, which I heard is not being used too much here in Turkey. This is special material that we normally supply to our clients in Asia and maybe the Middle East markets - about 10,000 mt a year. So, generally speaking, in 2024 we sold 160,000-180,000 mt in total, but we're trying to do it in a special way.
How do you see the export volume from China this year? Will it be impacted a lot by the new tariffs and will it be supported by production cuts or not?
That's a big question. For the first part about whether the steel volume will be cut - I don't really think so. Half the year has passed now and we haven’t seen any kind of significant cuts. The answer is already clear to everybody.
To be frank, we are facing a more difficult export environment, generally speaking, compared with last year. Actually, I think that, at least for me or for the industry, we need to work harder to export more, of course at the correct price.
What about the restructuring of the local market in China? We know the real estate and construction slowdown has impacted the market in the past two years, but consumption in other areas like manufacturing and car production is increasing. Do you believe local demand in China will decrease in the coming years, or will we see some support?
I'm not a decision-maker but, to be frank, I don't know how they will make policies for the next half year or the next one or two years. But I can see that steel consumption has been reduced - not only this year, but for the past couple of years. Actually, we are trying to reduce steel capacities every year, and we have promised the world to achieve a carbon balance by 2030, so cutting production capacity is a must.
But maybe the difficult times we are facing now will slow down the whole process - it will probably slow down because we have reasons. We need to overcome the difficulties for now, then we can do something for the future.
I agree that steel capacity theoretically should be decreased a little bit because we don't need as much steel as in the golden period which was five or 10 years ago. So, there's no reason we should still produce this steel if we cannot use it.
Since we're talking about specific products you're dealing with, can you tell how the markets for these specialty products like very thin coils were impacted by tariffs? For common grades of HRC, CRC and galvanized, it's getting harder because of protectionism, but what's happening in these very narrow markets because of the introduction of tariffs?
Technically, if we speak based on HS codes, there's no difference between 0.1 mm and 0.4 mm thickness - they have the same code. So, I don't think it will work to avoid tariffs this way.
But, actually, what we are doing is different. First of all, these heavy gauge or thin gauge coated products are only produced in China, or let's say we have enough capacity to support global demand for these products. Of course, there are some industries that need this special material, and this is value-added material. As everybody knows, to produce 0.1 mm is much more difficult than to produce 2.4 mm or 1.0 mm.
So, we are trying to sell this kind of material to avoid competition. That's what we're trying to do. We didn't aim to fight against the tariff policy with such small products - no, that's not what we're trying to do. We are just trying to avoid competition from our competitors.