FOR STEEL EXPORT PRICES FROM CHINA - MEPS
Chinese steel producers increased their
export offer prices for most steel mill products in January, compared to those
issued for the previous month. The proposed advances ranged from zero to 15.5
percent, depending upon the form of supply. The most significant upturns were
proposed for exports of cold rolled and zinc coated coils – with figures of in
excess of 15 and 8 percent, respectively, announced.
Export offer prices, in January, for the remaining items are scheduled to rise
by significantly smaller percentages than those proposed for cold rolled and
coated coils. These products include hot rolled coil and plate, plus wire rod
and reinforcing bars. To date, structural sections and merchant bar export
figures are stable at their previous values.
The Chinese proposals are not guaranteed to be accepted by customers around the
world. However, the latest figures do show a change in export selling policies
by the industry, compared with those in the previous twelve month period, when
contra strategies were prevalent.
It is interesting to speculate about the reason for the latest change in the
Chinese steel export strategy. Over the last twelve months, export offer prices
steadily decreased by 42 percent for flat and 33 percent for long products.
Clearly, the policy of price cutting did not improve the financial situation at
the mills in China. In fact, the opposite was the result. The industry, as a
whole, is now in crisis - with major losses recorded across the industry. The
existing policy had to change.
The one of slashing steel prices in the domestic and export markets did not
generate significant extra business for the local steel mills, in 2015. In fact,
the country’s steel output fell in the year. Granted, the mills gained
approximately 20 million tonnes of exports, in 2015, compared to the previous
year but at a significant cost to total revenue – considering the price
reduction per tonne of sales.
If the previous policy was designed to drive a significant part of the foreign
competition out of business, then it can be said that it was only partially
successful. A number of steel plant closures have taken place recently, mainly
in the western world but also in other regions. Several more are under threat.
Plant closures are conspicuous by their scarcity in the Chinese steel industry.
We detect that the previous trading policies associated with the steel industry
are likely to be damaging the Chinese case for market status in the country’s
application to the WTO.
China Steel Review - January 2016 Edition
Also See: www.worldsteelnews.com
Sign up for free
MEPS steel news alerts