At the 17th SteelOrbis Steel Conference “New Horizons in Steel Markets” held today, November 30, in Istanbul with the participation of more than 600 participants Hüseyin Ocakçı, Middle East general manager of CIEC Group, shared the latest figures regarding the Chinese steel industry. China’s daily liquid steel production remained low at 2.2 million mt as of November amid insufficient margins. With the winter months approaching, restrictions on production have started and in the short term the expectations regarding supply are limited, resulting in lower production. Mr. Ocakçı said that in 2021 China’s capacity utilization rate stood at a record 92 percent and is expected to close 2022 at 85-86 percent.
According to the CIEC official, in October Chinese steel exports increased by 200,000 mt month on month to 5.2 million mt, with the monthly average in 2022 coming to 57 million mt. Flat steel accounted for 55-60 percent of total exports, while the October figure remains under the average standing at 3 million mt, with the monthly average at 3.6 million mt. On the other hand, long steel accounted for 12 percent of total steel exports, while long steel exports increased by 77,000 mt month on month to 650,000 mt in October, with the 2022 monthly average standing at 618,000 mt.
Looking at imports, Mr. Ocakçı said that China’s billet imports amounted to 110,000 mt in October, with a 15,000 mt increase compared to September, while the monthly average is 165,000 mt. He pointed out that the imports also include Russian billets, adding that billet imports which had been coming from Southeast Asia and the Middle East last year have not been seen in China this year. Regarding slab imports, the volume declined by 168,000 mt to 295,000 mt in October, with a monthly average of 283,000 mt.
Exporting 65 million mt of steel in 2021, China is expected to close 2022 with 68 million mt of steel exports, as this year’s monthly average is 5.7 million mt, the CIEC official noted. He said that Chinese steel exports accounted for 6.3 percent of total domestic steel production, while China’s liquid steel production accounts for 53 percent of total global production and the country’s steel exports make up for 14 percent of global steel exports. He also stated that China’s scrap consumption remains quite low at 16 percent in comparison to the global market.
According to the figures for the first nine months, China’s steel exports decreased by 1.7 million mt, while its export value went up by 30 percent. The country’s steel imports fell 31 percent in volumes and 8.5 percent in value and the country is a net steel exporter with a steel trade surplus of 37 million mt. Ocakçı pointed out that during the same period China’s imports amounted to 13.58 million mt and that the country which turned to imports in early 2020 during the pandemic will likely continue importing steel in the coming period as well.
Touching upon one of the major topics regarding China, Hüseyin Ocakçı said that in 2022 construction areas declined by 46 percent, investments in the real estate industry fell by 7.5 percent and real estate sales decreased by 40 percent. The real estate industry accounts for 15-20 percent of the country’s economy. “While construction companies are trying to destock, credits lines provided for construction companies declined by 27 percent and mortgage loans decreased by 24 percent,” Ocakçı noted. He went on to say that now there are problems regarding supply and demand, though he said he thinks that in 2023 demand in the real estate industry is likely to exceed supply.
Lastly, looking at current price levels, although iron ore and coking coal saw slight upticks, the prices are not at a level to disturb the Turkish market, and China already is not active in this region.