Chinese steel exports to surge to 117 million tonnes in 2016 – MySteel
Bloomberg reported that according to Mysteel Research, China is poised for another year of record steel exports as domestic demand fades and the country’s mills sidestep trade barriers by seeking new markets. Ms Ren Zhuqian, chief analyst at Mysteel, said in an interview that “Shipments from the world’s top producer will accelerate in the second half as prices decline and margins are squeezed. Exports could reach 117 million tonnes for the year, up 4 percent from last year’s record 112.4 million tonnes.”
Ms Ren, echoing Goldman Sachs Group Inc, which last week said the benefits of a stimulus-fueled bout of growth had already worn off and that demand will decline in the second half, said “China’s output will fall from last year, but demand will decline even further and prices are going to be swinging around break-even for most mills.”
She said “China’s exporters are increasingly seeking new buyers in Southeast Asia, the Middle East and Africa where they see less protectionism and stronger demand.”
She said “There are signs that China’s mostly state-run steel industry is starting to tackle oversupply, She is optimistic the government will fulfill its pledge to cut as much as 150 million tonnes of capacity by 2020. Meanwhile, steelmakers, particularly in the private sector, have become more willing to reduce output when margins evaporate.”
She added “Companies will be less tolerant about making a loss in the second half. The private steelmakers are more responsive to price and faster in cutting.”
China shipped 46.3 million tonnes of steel overseas in the first five months of this year, up from 43.5 million tonnes from a year earlier.
Source : Bloomberg