Japan’s steel industry is concerned that rising exports from China, the world’s top supplier, will nip an Asian steel rally in the bud, just as mills had begun to benefit from the gains in price.
China’s March steel exports surged 30 percent to their highest level for the year, having already hit a record in 2015, as mills expanded output to all-time highs to take advantage of a more-than 50 percent surge in domestic steel prices in 2016. China is forced to export its surplus as its economy slows, hurting competitors and raising trade tensions.
Those exports are now “a concern,” Japan Iron and Steel Federation Chairman Koji Kakigi told reporters on Thursday in Tokyo. “At issue is how long the current price increase will last. We are unable to predict how long it will be.”
Kakigi is also president of Japan’s No. 2 steel mill, a unit of JFE Holdings Inc., which rallied along with other Japanese steelmakers last week after Credit Suisse Group AG upgraded the company due to its exposure to a resurgent Asian market. Kakigi told the briefing that steel suppliers in Japan, the world’s second-biggest producer, had started to see a pickup in export inquiries spurred by earlier output cuts in China.
JFE and larger rival Nippon Steel & Sumitomo Metal Corp. report full-year earnings next week, having both slashed their forecasts earlier in the year due to competition from China.