According to statistics from the General Administration of Customs, in November 2020, China imported 1.854 million tons of steel, a decrease of 76,000 tons from October and a year-on-year increase of 77.9%; from January to November 2020, China’s cumulative steel imports were 18.859 million tons, a year-on-year increase. An increase of 74.3%.
“Since the beginning of this year, due to rising domestic steel prices and strong domestic demand, China’s steel imports have increased year-on-year in the first 11 months.” Wang Siya, senior analyst at Jinlianchuang Steel, said that from the outbreak of the domestic epidemic at the beginning of the year to the effective control of the epidemic, two The economy began to recover in the quarter, especially when the demand side broke out. Whether it is the real estate, infrastructure, or manufacturing industries, they are resuming work and production at the fastest speed, and are developing rapidly. “Foreign countries have different attitudes towards the epidemic, leading to the delayed start of foreign economies, and steel prices at a relatively low level. However, domestic steel prices are affected by supply and demand, and prices are rising rapidly, which are higher than foreign steel prices. It is a low-lying area with high prices, which has led to the inflow of low-priced resources from abroad.” Wang Siya said that the high land price difference at home and abroad and the hot domestic demand were the main reasons for the year-on-year increase in China’s steel imports from January to November this year.
Data show that in November, China exported 4.402 million tons of steel, an increase of 362,000 tons from October, a year-on-year decrease of 3.8%; in the first 11 months, China exported 48.826 million tons of steel, a year-on-year decrease of 18.1%.
Wang Siya believes that the main reason for the month-on-month increase in China’s steel exports in November is that the development of foreign manufacturing has not stalled. With the improvement of domestic demand in many countries, the growth of new export orders for three consecutive months reached the highest level in two and a half years. Among them, the fastest-growing countries are China, Germany, India, the United Kingdom, Brazil and South Korea. Affected by the high domestic steel prices and the relatively late start of foreign demand, China’s overall steel exports declined significantly in the first 11 months of this year.
However, in terms of prices, in the near future, it is mainly due to the recent continuous record highs of futures, which has driven the domestic steel price to exceed 200 RMB/ton per day. “The crazy increase in iron ore prices has raised domestic steel production costs and reduced the profit margins of steel mills.” Wang Siya said that although the prices of finished products have risen, iron ore has driven the prices of all raw materials upward, significantly increasing production. Cost has reduced the profit margin of steel. It is not conducive to the healthy operation of domestic steel prices and also caused the outflow of profits from price increases. “Taking hot coil export quotations as an example, compare the export quotations of Turkey (FOB 698 USD/ton), the CIS (FOB 688 USD/ton) and India (FOB 743 USD/ton) on December 21. 641 USD/ton) still has an advantage.” Wang Siya said.
“Affected by domestic steel prices and the demand side, China’s steel imports will continue to fluctuate within a narrow range at the current level in the future, and the possibility of a large increase is unlikely.” Wang Siya said that foreign resource imports are mostly concentrated in coils and billets. Looking at the impact of finished steel coils, raw material prices drive global steel production costs. Although domestic steel prices are relatively high, they still have a certain competitive advantage compared with international prices. Therefore, when the price difference is not obvious, it’s unlikely that imports will increase substantially in the future.
In terms of exports, currently attracted by domestic coils, steel mills’ coil production needs to be increased, and there is still room for growth in the future. The continuous increase in foreign and domestic orders is still conducive to coil resource consumption, plus some steel mill exports After the list has been queued until March next year, the list will start to warm up on a large scale in the short term. “Considering the time cycle of order production and delivery, it is expected to last until the first quarter of next year. With the recovery of foreign epidemics in the later period, the manufacturing industry will continue to accelerate development, and overall it will still be beneficial to the export of domestic coils.” Wang Siya said.