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Customs data shows that since the beginning of this year, China's monthly steel exports have maintained a high year-on-year growth rate of about 50%, but the growth rate in May has significantly narrowed to 7.7%. The interviewed experts stated that under the combined effects of internal and external factors such as the weakening of China's steel export price advantage, the decline of overseas manufacturing industry, and the gradual easing of global steel supply weakness, China's steel exports may face contraction pressure in the later stage.

According to customs data, in May, China exported 8.356 million tons of steel, a year-on-year increase of 7.7%. According to customs data, 36.369 million tons of steel were exported in the first five months, a year-on-year increase of 40.9%. Compared to China's exports of steel, which increased by 49%, 59.6%, and 59.4% year-on-year from January to February, March, and April, the export growth rate significantly slowed down in May. Nevertheless, the sustained growth under the high base still drove the monthly steel export volume to exceed 8 million tons in May, reaching a new high since October 2016. According to customs data, China's steel exports have maintained a year-on-year upward trend for 13 consecutive months.

On the demand side, the global manufacturing PMI continues to operate weakly, and the external support for steel demand is weakening. The China Federation of Logistics and Purchasing and JPMorgan Chase's global manufacturing PMI in May were both less than 50%, continuing to operate in a contraction range. Among them, the global manufacturing PMI released by the China Federation of Logistics and Procurement was 48.3%, a decrease of 0.3 percentage points compared to the previous month, a consecutive three month month on month decrease, and a continuous eight month decrease of less than 50%, which is a new low since June 2020. Only 6 of the major countries and regions monitored by JPMorgan Chase have manufacturing PMIs above 50%, which is the same as the previous month. Wang Guoqing, Director of Lange Steel Research Center, pointed out that geopolitical conflicts, inflationary pressures, banking crises, and other factors have led to a sustained lack of momentum for global demand growth, and the global economy continues to show a weak recovery trend. These will all have a certain inhibitory effect on China's steel external demand in the later stage.

On the supply side, the year-on-year decline in global steel production continues to narrow. According to the statistics of the World Steel Association, in April, the crude steel output of 63 countries and regions included in the statistics was 161.4 million tons, down 2.4% year on year, and the decline continues to narrow. According to the monitoring of the Lange Steel Research Center, in April, the global steel production of countries and regions other than China was 68.8 million tons, a decrease of 600000 tons compared to the previous month, a year-on-year decrease of 1.6%, and a decrease of 2.9 percentage points compared to the previous month. Among them, the cumulative crude steel production of Ukraine by Russia and other CIS countries is 7.5 million tons, an increase of 5.9% year-on-year.

At the same time, the price advantage of China's steel exports has weakened. Wang Guoqing pointed out that since April, the export prices of overseas and Chinese hot coils have significantly decreased, and the advantage of China's steel export quotation has gradually weakened. According to the monitoring data of Lange Iron and Steel Research Center, as of June 6, the export quotation (FOB) of India, Türkiye and CIS for hot rolled coils was 580 dollars/ton, 645 dollars/ton and 580 dollars/ton respectively, while that of China was 560 dollars/ton. The gap between the quotations has narrowed significantly compared with the previous two months.

The changes in steel supply and demand are also reflected in the export order index. Due to the decline of overseas manufacturing and the weakening trend of external demand, the export order index of China Steel enterprises fell back to the contraction range again. The index of new export orders for steel enterprises surveyed by the China Internet of Things Steel Logistics Professional Committee in May fell 11.4 percentage points to 44.1%, returning to the contraction range. Customs data shows that although the new export order index of steel circulation enterprises surveyed by Lange Steel Network has rebounded by 1.2 percentage points to 47.2%, it is still operating in a contraction range.

Based on the analysis of the current global steel supply and demand situation, Wang Guoqing judged that China's steel exports will be restrained to a certain extent in the later stage, and the high growth rate will be difficult to sustain. (Translated from: International Business Daily)