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Home > MEPS Steel News - 10.11.2014

CHINESE STEEL LOSING SOME OF ITS COMPETITIVE EDGE - MEPS

UK steel industry analysts, MEPS, reports that, in October, a profound change developed in the relationship between Chinese export steel prices and domestic selling values in the rest of the world.

According to the company’s latest report, CHINA STEEL REVIEW, Chinese exporters lowered their steel prices last month for most rolled steel products. The median reduction was US$13 per tonne. However, average domestic selling figures in North America decreased by US$17 per tonne in the same period. Local average steel selling values in the European Union decreased by US$27 per tonne and those in East Asia fell by US$35 in October.

The differential between Chinese export delivered prices and domestic selling values is a key item in the decision making process to purchase from China. Improved quality from Chinese mills has also, however, played its part.

It is possible that, in the near future, China’s steel products could become less attractive to buyers in the industrialised countries of the world, particularly, if their steel market conditions deteriorate further.

Total Chinese exports of all steel products, including tubes and semi-finished goods, totalled 51.54 million tonnes in the first eight months of this year. This represents an increase of 36 percent on the outturn in 2013. Foreign supplies of the nine finished rolled steel mill products, which had not undergone further processing, were recorded at 44.2 million tonnes - up by almost 45 percent in the same period.

The most popular finished rolled steel products for export remain hot rolled coil, wire rod and merchant bar. Statistics for the latter item are dubious, because it is widely believed that a proportion of billet sales were recorded as merchant bar in the official documentation to avoid export taxes. The tonnage sold under the banner of merchant bar has increased by approximately 75 percent so far this year. This figure is almost double the average increase for all the other products.

The Chinese mills were able to lift their sales volumes of rolled steel products because of their ability to compete on price with other manufacturers around the world. This developed despite the cost of freight and extended period of time for delivery. A change to this situation may be on the horizon. Chinese steel exports may decline in 2015. Watch this space.



 

Source: MEPS China Steel Review - October Edition

Also See: www.worldsteelnews.com
 

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