How to Deal With the Continued Differentiation of Steel Import and Export

Steel import and export present five major characteristics

1. Steel export volume hit a seven-year high, while import volume fell below 10 million tons

In 2023, China exported 90.264 million tons of steel, a year-on-year increase of 36.2%, a new high since 2017; China imported 7.65 million tons of steel, a year-on-year decrease of 27.6%, which was less than 10 million tons for the first time since public data were recorded in 1995.

2. The steel export unit price has dropped comprehensively, and the import and export price difference has further “widened”.

In 2023, the average price of China’s exports of steel tons of steel was 6569 yuan, down 31.19% year-on-year, ending the trend of rising for six consecutive years, of which the unit price of steel exports of more than 6,000 yuan was about 38%, about 30 percentage points lower than the previous year; The average price of imported steel tons of steel is 11650 yuan, a new high in the past decade. The gap between import and export prices has further widened, but it does not mean that the competitiveness of China’s steel products is insufficient or declining, and the reasons are mainly as follows:

First, affected by the global market downturn, in addition to Europe and the United States, global steel prices are generally declining; Second, the domestic steel market demand is insufficient, competition is intensified, some enterprises by reducing export prices in exchange for cash reflux, pull down the average price of steel exports; Third, the depreciation of the RMB against the US dollar has lowered the price of China’s steel exports in a disguised way. Fourth, the current volume of China’s steel imports is less than 1/10 of the export volume, and the import and export prices are not comparable.

3. Demand changes and tax rebates are cancelled, and the steel export structure continues to adjust

Affected by the reduction in China’s domestic demand for construction steel, the export volume of steel varieties widely used in the construction industry such as steel bars, medium and thick wide steel strips, hot rolled thin and wide steel strips, wire rods, and small and medium-sized steel sections increased significantly in 2023, increasing 145.7%, 96.8%, 78.2%, 49.7% and 40.7%, respectively. Exports of hot galvanized sheet and galvanized aluminum sheet, including high-end automobile plate and home appliance plate, also increased, from 6.36 million tons and 1.86 million tons in 2020 to 7.78 million tons and 2.6 million tons in 2023, respectively. The export volume of industrial wire with a diameter of < 14mm increased from 250,000 tons in 2020 to 3.51 million tons in 2023.

In addition, since the cancellation of export tax rebates in 2021, the export volume of alloy steel plate/strip (including alloy steel electroplated plate strip) and alloy steel bar wire has decreased significantly, from 10.87 million tons and 3.99 million tons in 2021 to 4.28 million tons and 1.69 million tons in 2023, but the average export price has increased significantly. Increases of nearly US $87 and US $198 from 2021, respectively, indicate that with the cancellation of the tax rebate, the export volume of ordinary steel that has received the tax rebate in the name of alloy steel has been significantly reduced.

4. Steel imports and exports are mainly for Asia, but Latin America and Africa are growing faster

In 2023, China’s steel exports to Asia 61.39 million tons, an increase of 43.37%, accounting for 68% of the total steel exports; Exports to Latin America and Africa were 11.45 million tons and 9.93 million tons, up 44% and 24%, respectively. Exports to Oceania 930,000 tons, an increase of 10%; Exports to Europe 5.08 million tons, an increase of 3.7%; Exports to North America 1.43 million tons, down 16%.

In 2023, China’s steel exports are mainly to India, the United Arab Emirates, Brazil, Vietnam, Turkey and other 10 countries, accounting for about 54% of China’s total steel exports. Among them, steel exports to India, the United Arab Emirates, Brazil, Vietnam, Turkey, Egypt, Russia increased by more than 50% year-on-year, and exports to the United States, Canada, Italy, Belgium fell by 14%-30% year-on-year.

5. Imports of primary products continued to decline sharply while exports grew rapidly

In 2023, China’s steel primary products (including billets, ingots, pig iron, direct reduced iron, recycled steel raw materials) imported 4.568 million tons, down 48.9%, and exported 3.349 million tons, an increase of 1.6 times. Among them, the billet (including steel ingot, the same below) imported 3.3 million tons (CISA released data of 3.27 million tons), a cumulative decline of more than 80% compared with 2020; Billet exports have grown significantly, soaring from less than 20,000 tons in 2020 to 3.28 million tons in 2023.

China’s billet exports are mainly to Italy, Indonesia, the Philippines and other places, accounting for more than 50%, mainly from Zhejiang, Hebei, Jiangsu, Fujian, Guangdong and other ports, accounting for 86% of total exports. Billet imports are mainly from Oman, Russia, Indonesia and other countries, accounting for nearly 80%, mainly from domestic ports in Hebei, Jiangsu, Anhui, Fujian and other places, accounting for 86% of the total imports.

Three points of attention

1. China’s steel exports are mainly oriented to Asia, in the short term, the European and American markets have little impact on China’s exports, but in the long run, attention needs to be paid.

China’s steel and billet exports accounted for about 9% of domestic crude steel production, significantly lower than Japan, South Korea, Germany and Turkey more than 35%; China’s steel exports to Asia accounted for more than 50% of total exports, exports to Europe and the United States combined only about 7%. In the long run, with the United States’ suppression of China’s export trade and the advancement of Japan’s globalization process, the market share of China’s steel exports to Europe and the United States may be further reduced, which needs to be paid attention to.

2. The global supply of high-end steel is growing, and the competitive pressure of China’s steel exports is further intensified.

As China’s steel goes out, the steel production capacity in Southeast Asia is increasing rapidly, exports are growing, the quality and variety of steel products are gradually expanding, while Japan and South Korea in order to ensure the share of steel exports, but also moderately lower export prices, under the influence of multiple factors, China’s steel export cost advantage is gradually declining, the future needs to be in the high-end, green direction.

3. China’s steel exports have increased for three consecutive years, and overseas anti-dumping has continued to heat up

Since 2021, China’s steel exports have maintained a growth trend, and it is expected to account for more than 20% of global trade in 2023, and overseas anti-dumping incidents have also increased. According to incomplete statistics, in 2023, overseas countries launched a total of 112 anti-dumping, countervailing and other announcements against China’s steel products, an increase of about 20 over 2022, and the risk of increased trade friction needs to be vigilant.

Three-tier proposal

At present, China’s steel industry is facing new situations and new challenges such as market downturn, resource and energy constraints, increasing green requirements, and intensifying international trade barriers. It is suggested that relevant parties work together to respond and jointly promote the high-end, intelligent and green development of the steel industry.

At the government level: First, policy-oriented, smooth circulation in the domestic steel market, consolidate and enhance the power of steel domestic demand, and promote the linkage of steel production capacity, output and export management, and guide steel products to meet domestic demand; The second is tax guidance, studying the imposition of energy taxes and carbon taxes on the export of primary and low value-added steel products, while continuing to optimize the steel tax items, and gradually smooth the export of high-end steel.

Industry level: give full play to the role of platforms and resources of industry associations, research institutes and universities, on the one hand, organize and coordinate all parties in the industrial chain, expand steel consumption demand in key areas, expand steel application scenarios, and form effective demand traction. On the other hand, we will strengthen the analysis of the impact of carbon border adjustment mechanism (CBAM) on the import and export of steel products in China, and put forward countermeasures for changes in global trade standards and rules.

Enterprise level: First, carry out green and digital transformation, comprehensively improve the efficiency of resource allocation, production, circulation and energy utilization, dig deep into the space for cost reduction, and achieve green and high-quality development. The second is to implement the optimization and upgrading of variety structure, actively adapt to market changes as the demand for steel products weakens, change the traditional concept of winning by quantity, and reconstruct a new balance between supply and demand.

As a steel export trader, GloryRail has established cooperative relationships with many new customers in 2023, most of which are from Vietnam, Myanmar, Singapore in Southeast Asia, and of course there are also customers from Europe. At the beginning of the new year, we hope to establish cooperative relationships with customers from more countries and regions. Anyone who is watching this article, if you have some interest in our product, just contact us!

This article is translated from the Metallurgical Import and Export Standards Research Institute. If there is any infringement, please contact us to delete it.