SteelOrbis talked to Adam Miao from Wuxi Huaye Iron and Steel about the latest developments in the Chinese steel market.
Could you introduce your company? What are the main products you are dealing with and the geography of your sales?
Thank you for taking the time to meet us. We are from Jiangsu Province - our city is about one hour from Shanghai. We are a manufacturer of cold rolled steel, galvanized steel, galvalume steel, PPGI (pre-painted galvanized iron), and PPGL (pre-painted galvalume). We have been in the steel exporting business for 21 years now.
Our main markets are the Middle East, Asia, and African countries. We respect contracts very much, and our advantages are experience and professionalism. Our material is offered at very competitive prices. So, our main market is Africa, where we have very good prices for our customers.
Can you tell us the annual capacity of your plant?
Our capacity is 500,000 mt per year. For exporting, it's almost 35 percent - that's 200,000 mt per year.
Local steel consumption in China is slowly going down because of the real estate problems, and exports were at record volumes last year. What do you expect for this year? How do you see demand in the domestic and export markets?
You know, China has one of the biggest populations in the world. We have a very large domestic market. When we started focusing professionally on exporting, from the time of COVID in 2020 our exports increased faster, were not reduced, even with China's economic slowdown.
You know there are also antidumping duties and high import duties from other countries. Even with these, China can export more, despite the economic slowdown. From January to April this year, China's steel exports still showed a four percent increase. So, for us, business is still very good.
What about production? Steel companies in China still need to export a lot, and we saw crude steel production increase in the first five months. How about your production plans for this year?
Honestly, you know we follow HRC futures market prices. Currently, prices are reducing and are now at the lowest level of this year. Since we are exporting, this is our advantage. When Chinese prices become more competitive, we can export larger volumes. Because we do international business, we are focused on overseas markets. So even though the domestic market demand is reducing, our prices become more competitive.
As you mentioned tariffs, what is your opinion on the impact from Trump's tariffs and also other countries' policies? We saw big impacts on HRC from the antidumping duties imposed in Vietnam and South Korea. How do you see the export environment for CRC, galvanized, and galvalume?
You know, 10 years ago we used to also export large quantities to the US. But because of antidumping duties, we had to stop.
You know, the United States doesn't want China to become an economic leader, and they make many troubles for China. China is a very peaceful country and doesn't want to make any kind of war with any country. Trump is a very successful businessman and very smart. They want to use economic war to fight with China.
Regarding products with higher value addition like coated products, what do you see as the major challenges and opportunities for selling from China? Has competition in these segments been increasing or decreasing lately?
China has fairly low production costs to produce high-technology materials and sell at very competitive prices. For coated materials, China has too much advantage compared to countries like India. For PPGI, maybe there are some European mills, but I don’t think there are any other that can compete with China.
We also export to Libya, and they always compare our prices with Turkish prices. Except for freight charges - from China to Libya it's almost $100, from Turkey to Libya maybe $10 as the two countries are close - we have similar price levels. You know, our material prices are much lower than Turkey for PPGI and GI. Some customers compare Turkish and Chinese prices. If they need fast delivery and Chinese prices do not offer too much advantage, for example just a $10-20/mt difference, they will buy from Turkey, not from China.