- Seven-month period sees largest volume of steel ever shipped
- Iron ore demand responds with July imports at second highest
There’s a river of steel flooding from China despite the best efforts of governments around the world to dam the flow from the top producer, with data on Monday showing that overseas shipments held above 10 million tons in July.
Sales increased 5.8 percent on-year to 10.3 million metric tons last month, compared with 10.9 million tons in June, according to China’s customs administration. Exports in the first seven months expanded 8.5 percent to 67.4 million tons, a record volume for the period. That’s in line with what South Korea, the world’s sixth-largest producer in 2015, makes in an entire year.
The robust export showing by China’s mills contrasts with the country’s broader performance last month, which fell in dollar terms, and risks further stoking trade tensions with partners from India to Europe after they imposed curbs to keep out the alloy. Premier Li Keqiang has defended the country’s growing presence in overseas steel markets, saying last month that overcapacity isn’t the fault of a single country.
“Orders from abroad have held up relatively well as steelmakers in China have a cost advantage,” Dang Man, an analyst at Maike Futures Co. in Xi’an, said before the data. “Attention is still on global trade friction as the number of cases against Chinese exports is quite large.”
The nation isn’t being overly affected by the ballooning number of trade cases because most have been brought by countries that don’t import large quantities from China, with many targeting very specific products, Morgan Stanley said earlier this month. To insulate local mills further from the glut, India last week extended its floor-price regime on steel imports for a further two months.
The surge in steel exports this year has helped boost demand for iron ore. China’s imports of the raw material gained 8.1 percent in the first seven months to 582 million tons. In July, inbound cargoes were 88.4 million tons, the second-highest ever, from 81.6 million in June, customs data showed.
Ore with 62 percent content at Qingdao increased 6.7 percent in July and was at $60.74 a dry ton on Friday, according to Metal Bulletin Ltd. Prices of steel reinforcement bar in Shanghai rose 3.2 percent last month, extending their 18 percent gain in June.
The record steel exports from China featured among discussions at the Group of Seven leaders’ meeting in Japan in May, with Prime Minister Shinzo Abe saying China wasn’t doing enough to tackle oversupply and government support was distorting markets. Mills worldwide urging action against China’s shipments have said that the cargoes are being sold overseas below-cost.
Trade protectionism probably won’t stem the flow of Chinese seaborne steel as only a small proportion of exports went to the nations that originated the tariffs, Axiom Capital Management Inc.’s analyst Gordon Johnson said in a note on Monday. “Our conclusion suggests perpetuating oversupply in global steel markets,” he said.