China imports more semi-finished steel as finished steel exports drop Report

Insight 29 October 2019

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Report summary

In H2 2019, China’s imports of semi-finished steel products have skyrocketed, which is playing out against the backdrop of falling finished steel exports. Chinese producers have been losing their cost competitiveness and consequently market share to other cheaper sources of steel. Chinese producers can take advantage of such low prices in international markets by buying more semis from overseas, which explains the recent hike in billet imports.

Executive summary
China imports more semis and exports less finished steel
It is cheaper to import billet than to buy it domestically
No incentive to export finished steel with a relatively stronger domestic market
Chinese steel producers are losing competitiveness
Higher feedstock costs have held Chinese producers back
- Higher iron ore cost
- Higher scrap cost
- Higher domestic coking coal cost
- High costs erode competitive edge in global market
How does this affect our forecast?

Tables and charts

This report includes 8 images and tables including:

Semis imports have been rising since May 2019
Finished steel exports have continued to fall
Billet is cheaper in foreign markets than in the domestic market

No incentive to export rebar as its domestic market is better
No incentive to export HRC either, even though its domestic market is weaker than the rebar market
Steelmakers would make losses exporting to weaker foreign markets, as they are only making very thin margins in the relatively stronger domestic market
Domestic scrap price is remarkably higher than the price in the foreign market
China’s coking coal price is also higher than the price in the international market