CCCMC: China’s finished steel exports face increasing difficulties

Thursday, 02 April 2020 17:37:08 (GMT+3)   |   Shanghai

China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters (CCCMC) has announced that difficulties facing China’s finished steel exports have increased due to the coronavirus pandemic worldwide hitting the global real economy. Moreover, falling demand for iron ore globally may lead to oversupply of the raw material. Most market analysts consider that the negative impact of the coronavirus will exceed the levels recorded during the financial crisis year of 2008.

In the period from October 2008 to September 2009, the average year-on-year declines for crude steel and pig iron outputs in the global market except China stood at 28.13 percent and 28.93 percent.

In the January-February period this year, global pig iron output except China indicated a year-on-year drop of 4.3 percent. In March, there were more output reductions among steelmakers in the global market. If annual global pig iron production, except China, were to decline in 2020 at year-on-year rates of five percent, 10 percent or 20 percent, then the respective shortfalls in global pig iron output, excepting China, would be.8 million mt, 45.61 million mt or 91.23 million mt year on year. The corresponding declines in global iron ore demand in each of these respective scenarios would be 36.49 million mt, 72.98 million mt and 145.96 million mt year on year. Accordingly, CCCMC forecast that iron ore demand will face downward pressure in the near future.

In addition, China’s finished steel exports amounted to 7.811 million mt in the January-February period this year, down 2.886 million mt or 27 percent year on year - the highest decline since March 2018. Though the coronavirus has been controlled effectively in China, the quick spread of the coronavirus pandemic globally has exerted a negative impact on China’s finished steel exports. “Our economy is an export economy. If there are no exports, the local market will not improve,” a Chinese trader commented to SteelOrbis. China’s import activity for semis and hot rolled coil (HRC) has increased recently, and this trend will likely continue in the coming months, though at a slower pace. The decreasing exports and increasing imports will negatively affect the local finished steel market. 

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