In the first half of 2006, both steel imports and exports of
China developed fast. Especially steel exports increased rapidly and contributed greatly to soften the pressure on the domestic market caused by surplus steel capacity.
According to the statistical data from
China Iron & Steel Association, in the first six months of 2006,
China's steel product exports increased 47.71 percent year on year to 17.09 million tons. Among the total figure, slabs and billets accounted for 3.1 million tons, down 35.63 percent. Meanwhile,
China's steel product imports decreased 28.81 percent to 9.41 million tons; 212,800 tons of which were slabs and billets, with 72.5% decline year on year. If we convert the above figures into crude steel, the imported crude steel is calculated as around 10.22 million tons and the exported crude steel is around 21.29 million tons. Therefore, net export quantity of crude steel appears 11.06 million tons, up 8.76 million tons year on year.
Generally speaking,
China's steel export has been very good in the last six months. But keeping such a trend for a long time is impossible. Besides, apart from the quantity, looking in the prices of imports and exports is also required to make a correct judgment. In this regard, the dynamics of
China's foreign steel trade can be analyzed under three titles:
1-Composition of imported and exported steel products
Among
China's imported 9.41 million tons of steel products, steel sheets accounted for 83.89 percent with 7.90 million tons; long products for 7.78 percent with 732.200 tons; pipes for 5.37 percent with 505.300 tons. On the other hand, among the exported 17.09 million tons of steel products; steel sheets accounted for 7.85 million with 45.91 percent share, long products for 5.59 million tons with 32.69 percent; pipes for 2.57 million tons with 15.02 percent, and railway steel for 108,200 tons with 0.63 percent. It is apparent that most of
China's imported steel is high value-added steel sheets while most of its exports are lower value added sheets and long products.
2- Differences between import and export prices
In the first half of 2006, the average import price was $1011.33/ton CFR, while the average export price was only $554.39/ton FOB. The difference is approximately $456.94/ton. Wiping off the
freight, difference between the two prices is about 40 percent. Therefore,
China has to export two tons of steel to balance one ton import. Although
China's export increased rapidly, compared to the imports, it is still at a weak level with low-valued products.
3- China is still a net steel importer
Although
China has become a net steel exporter in terms of quantity, it is still a net importer in terms of the value. In the first four months of this year,
China spent $6.26 billion on steel imports, while it gained $5.11 billion from exports. The margin is $1.15 billion.
In sum,
China is of course a big steel country, but it is not strong actually, when the value of imports and exports are considered. Therefore Chinese steelmakers have to improve their products' structure and quality as soon as possible in order to keep up with their counterparts abroad; which is not easy of course.