What is the situation of China's steel exports in 2024?

According to statistics from the the People's Republic of China General Administration of Customs, in terms of exports, in December 2023, my country exported 7.728 million tons of steel, an increase of 43.1 percent year-on-year; from January to December 2023, my country exported 90.264 million tons of steel, an increase of 36.2 percent year-on-year. In terms of imports, in December 2023, my country imported 665000 tons of steel, down 5.0 percent year-on-year; from January to December 2023, my country imported 7.645 million tons of steel, down 27.6 percent year-on-year (see Figure 1 for details).

Figure January steel import and export trend

Steel net exports are still showing a significant year-on-year growth trend

Under the influence of price advantages and relatively sufficient early orders, although my country's steel exports showed a month-on-month decline in December 2023, they increased significantly year-on-year. Steel exports in December 2023 decreased by 277000 tons from the previous month, down 3.5 percent from the previous month.

On the import side, steel imports rose month-on-month in December 2023, up 51000 tons from the previous month, up 8.3 percent from the previous month.

In December 2023, China's steel exports showed a substantial increase, while steel imports continued to run at a low level, and the net export situation remained obvious in a single month. According to the calculation data of Lange Iron and Steel Research Center, in December 2023, China's net export of steel was 7.063 million tons, an increase of 50.3 percent over the same period last year, and the growth rate was 2.4 percentage points lower than that of the previous month; in 2023, China's cumulative net export of steel was 82.619 million tons, an increase of 45.6 percent over the same period last year, a significant increase of 37.8 percentage points over the previous year.

Global manufacturing PMI runs in contraction range, external demand still faces contractionary pressure

The global manufacturing PMI is operating in a contraction range, indicating that the weak volatility characteristics of the global economy have not changed and downside risks remain. According to the China Federation of Logistics and Purchasing, the global manufacturing PMI was 48.0 per cent in December 2023 (see Figure 2 for details), unchanged from the previous month and running below 50 per cent for 15 consecutive months. Under the influence of inflationary pressures and geopolitical conflicts, the global economy in 2023 showed a weak recovery stability and insufficient recovery momentum. In 2024, the continuation of geopolitical conflicts such as the Russian-Ukrainian war, the Palestinian-Israeli conflict and the maritime situation around the Red Sea will still have an impact on global trade and will cause greater disruption to the global economic recovery in 2024. the stability of the global industrial chain and supply chain will still be challenged.

Figure 2 Global Manufacturing PMI Performance (%)

According to JPMorgan data, in December 2023, JPMorgan's global manufacturing PMI index was 49.0, down 0.3 percentage points from the previous month; among them, the output index fell in the contraction range, down 0.4 percentage points from the previous month to 49.5 per cent; while the new orders index fell again in the contraction range, down 0.3 percentage points from the previous month to 48.6 per cent. Among the 20 major global countries and regions monitored in December 2023, the manufacturing PMI of 4 countries was above 50%, a decrease of 2 from the previous month, and the manufacturing PMI index of 12 countries and regions was higher than the previous month. The month has fallen, accounting for 60%, reflecting the increasing pressure on the overall global manufacturing industry.

According to the December 2023 China Manufacturing Purchasing Managers Index data released by the China Federation of Logistics and Purchasing and the Service Industry Survey Center of the National Bureau of Statistics, the new export order index in December was 45.8, a decrease of 0.5 percentage points from the previous month, reflecting China's external demand Continue to be under pressure.

Overseas steel market supply continued to pick up year-on-year

In November 2023, global crude steel production continued to grow year-on-year. According to data from the World Steel Association, in November 2023, the crude steel output of 71 countries included in the World Steel Association statistics was 0.1455 billion tons, an increase of 3.3 percent year-on-year. Among them, the output of crude steel in Africa was 1.8 million tons, up 3.1 percent year-on-year; the output of crude steel in Asia and Oceania was 0.1048 billion tons, up 2.2 percent year-on-year; the output of crude steel in the European Union (27 countries) was 10.6 million tons, up 3.2 percent year-on-year; the output of crude steel in other European countries was 3.7 million tons, up 22.2 percent year-on-year; the output of crude steel in the Middle East was 4.8 million tons, up 4.0 percent; north American crude steel production was 8.9 million tons, up 3.1 percent year-on-year; Russia and other CIS countries + Ukraine crude steel production was 7.4 million tons, up 14.8 percent year-on-year; South American crude steel production was 3.5 million tons, down 0.6 percent year-on-year.

Figure 3 Overseas (except China) crude steel production in March

From the perspective of overall overseas steel production, the year-on-year situation continued to pick up. According to monitoring data from the Lange Steel Research Center, in November 2023, the output of the rest of the world outside China was 69.4 million tons (see Figure 3 for details), a decrease of 1.5 million tons from the previous month, a decrease of 2.1 percent from the previous month, an increase of 7.4 percent year-on-year, and a year-on-year increase of 2.4 percentage points from the previous month.

China's steel export price advantage still exists

Since 2024, the export price of overseas hot rolls has fluctuated slightly, the export price of China's hot rolls has risen slightly, and the advantage of China's steel export quotation still exists. According to the monitoring data of Lange Iron and Steel Research Center, as of January 11, 2024, the export quotations (FOB) of hot rolled coil in India, Turkey and CIS are 635 USD/ton, 705 USD/ton and 610 USD/ton respectively, while the export quotation (FOB) of hot rolled coil in China is 567 USD/ton; at present, China's hot coil export quotations are 68 USD/ton, 138 USD/ton and 43 USD/ton lower than those of India, Turkey and CIS respectively (see Figure 4 for details).

Figure 4 Monthly export price (FOB) comparison of hot-rolled coils.

China's steel industry export order index continues to run in the contraction range

From the perspective of export orders, due to the insufficient prosperity of overseas manufacturing industry, the weakening trend of external demand and the continuous recovery of overseas supply, the export order index of China's iron and steel industry is under pressure. The index of new export orders of iron and steel enterprises in December 2023 investigated by the China Federation of Things Iron and Steel Logistics Professional Committee was 48.7, up 4.4 percentage points from the previous month. Although it has rebounded, it is still operating in the contraction range (see Figure 5 for details); the index of new export orders of steel circulation enterprises surveyed by Lange Steel Network was 46.8, down 2.3 percentage points from the previous month. The export order index of iron and steel enterprises is still running in the contraction range, which will still restrict China's steel exports in the later period.

Figure 5 Change in new export orders in the steel industry (%)

Short-term steel exports are still expected to show a year-on-year growth trend

In December 2023, China's steel exports showed a slight decline from the previous month and still increased significantly year-on-year. At present, China's steel export price advantage still exists; overseas steel market supply continues to pick up year-on-year, the global manufacturing index in the contraction range fell again, the pressure on external demand increased, China's iron and steel enterprises export order index in the contraction range to continue to operate, will still be China's steel exports in the later period to form constraints. Considering that China's steel exports in January and February 2023 were 6.03 million tons and 6.16 million tons respectively, with a relatively low base, Lange Iron and Steel Research Center expects that China's steel exports from January to February 2024 will still maintain year-on-year growth and slightly fluctuate month-on-month. In 2024, my country's steel exports are facing certain downward pressure. Lange Steel Research Center expects my country's export volume to be about 80 million tons in 2024, a year-on-year decrease of about 10%.

In terms of imports, the current domestic manufacturing boom in the contraction range continues to fall, the pull of steel demand has been under pressure, while China's high-end steel import substitution capacity significantly enhanced, later China's steel imports will remain low level. (Original article by Wang Guoqing of Lange Iron and Steel Research Center, reprint must indicate the source)