China's steel export downtrend persists in July; traders wary of shrinking overseas demand

China's finished steel exports in July were down month-on-month for the second straight month to 7.827 million mt, reaching the second lowest level so far in 2024, although they were still up 7.1% on the year, customs data showed Aug. 7.

Finished steel exports in July were down by 10.5% from June, and 20.8% below the peak level seen in March at 9.888 million mt, according to the data.

For the first seven months of 2024, finished steel exports totaled 61.227 million mt, up by 21.8%, or 10.953 million mt, from the same period in 2023.

Meanwhile, finished steel imports in July continued downwards for the third consecutive month at 505,000 mt, down 12.2% on the month and 25.5% lower on the year. Steel imports over January-July were 6.7% lower on the year at 4.122 million mt.

As a result, net finished steel exports over January-July increased by 24.5% on the year to 57.105 million mt.

Looking ahead, exports are expected to decline in the second half of the year due to weaker overseas demand, some traders said, although others indicated that it was becoming more difficult to predict levels as depressed domestic demand could further weigh on Chinese steel prices and so encourage exports.

"China's steel exports are likely to continue downwards in the second half of 2024, because I think global steel demand is gradually declining," said one export trader.

Vietnam's antidumping investigation into steel hot-rolled coils from China and India was also a sign that Vietnamese steelmakers were facing shrinking overseas demand, the trader added.

However, other traders pointed out that China's domestic market could be more challenging in the second half of this year. The situation was already bleak due to persistent weak construction steel demand, they noted, but now there are also signs of stagnation in the manufacturing steel demand growth due to a lack of stimulus for consumer spending.

Some traders added that among flat steel products, cold rolled coil has been facing with the biggest pressures from stagnant domestic demand growth so far this year due to falling car sales.

Platts, part of S&P Global Commodity Insights, assessed Chinese HRC and CRC prices at Yuan 3,430/mt ($479/mt) and Yuan 3,800/mt on Aug. 6, down 16% and 20% respectively from the start of 2024.

"Because of weak domestic market, steel exports could still rebound at some point later this year. But it's almost certain that Chinese steel makers will face dual pressure from both stagnant domestic demand and declining overseas demand in the second half of 2024," said another export trader.