Just following steel price rebounds of five weeks in a row, steel export in turn loses price advantage, esp. compared with that made in CIS, which enjoys stable and cheap supplies of iron ore, coking coal and other materials.
At the end of last year, domestic HRC price began to recover and has stayed USD 100 per tonne to USD 200 per tonne higher than the international price. In CIS, commercial HRC was quoted at USD 410 per tonne to USD 420 per tonne in December compared with Chinese mainstream price of CNY 3800 per tonne luring not a few traders to import the product. As per Mysteel forecast, HRC import in Jan 2009 would be 300,000 tonnes to 400,000 tonnes never seen before.
With support of the stimulus policies and huge investments, China may become one of the few countries posting a steady steel demand in 2009, which is narrowing the price gap between home and overseas markets or may even pull the domestic in excess of the other.
1. Current HRC price offer in Shanghai market is up to CNY 3800 per tonne with possible export offer to stand at USD 570 per tonne, 30% higher than for CIS. This has seriously deprived of the price advantage and may pull export into stagnancy.
2. Expectancy of stable RMB and depreciation of the countries" currencies will also hurt steel export from China. For instance, Ukraine current has lost 36.6% against USD while CNY gains 6.8% in the period of end 2007 till January 2009, which wrote off advantage of Chinese steel price finally. This also happens in other markets incl. Russia, Mexico, Brazil etc. In South Korea in particular, shrinking demand and depreciating won are expected to hurt Chinese exports badly.
3. Trade conflicts are increasing in the world recessions as every country would like to protect steel industry as the world demand decreases. In the fourth quarter of 2008, China was attacked by US, EU, Canada, India and other economic bodies for exporting welded pipe and fastener. The trade protectionism is predicted to continue in 2009 if no substantial demand revival.
China exported a total of 59.23 million tonnes steel products down by 5.46% YoY accounting for some 10.39% of the total steel product output.