Will China's Steel Exports Decrease?

Recently, the Chinese government announced a crackdown on the export of low-cost steel products. In April, China's exports of finished steel products decreased. However, year-on-year growth continues, indicating that it may be challenging to resolve the oversupply in the short term.

According to data released by China's General Administration of Customs, April exports of finished steel products amounted to 9.224 million tons, a 6.7% decrease from the previous month, but a 16.3% increase from the same month last year. Cumulatively, from January to April, exports of finished steel products totaled 35.024 million tons, a 27.0% increase compared to the same period last year.

While exports decreased, imports of finished steel products in April rose by 6.6% from the previous month to 658,000 tons. However, due to weak domestic demand, cumulative imports of finished steel products from January to April decreased by 3.7% year-on-year to 2.405 million tons.

Despite a decrease in domestic crude steel production, delays in iron ore self-sufficiency and an increase in demand for high-quality iron ore led to a 7.2% year-on-year increase in iron ore imports, totaling 411.821 million tons from January to April. Additionally, increased demand for metallurgical and power generation purposes resulted in a 13.1% year-on-year increase in coal imports, totaling 161.154 million tons for the same period.

The decline in China's finished steel exports in April seems to be primarily due to a decrease in overseas demand driven by the global economic slowdown and reduced production by major steel companies amid the domestic economic downturn, rather than government regulations.

However, considering the recent stance of the Chinese steel industry and the government, it is possible that the trend of decreasing steel exports from China may continue.

Recently, Luo Tiejun, Vice President of the China Iron and Steel Association (CISA), stated that they would restrict the export of low-value-added products and crack down on illegal export channels. Both the central and local governments in China have also announced plans to strictly regulate illegal exports that evade value-added tax.

There are expectations that if China's steel export restrictions are effective, the domestic steel market will recover to some extent. However, some analysts believe that the overall impact will be limited as year-on-year growth remains strong.