China Customs data shows that China’s steel exports in the first 2 months of 2024 increased significantly by 30% to nearly 16 million tons compared to 12 million tons in the same period last year.
However, export volume in February 2024 decreased by 18% from the previous month to 7.17 million tons compared to 8.74 million tons in January due to liquidity issues, focus on domestic raw materials and global demand decreased.
Notably, in the first 2 months of 2024, some main importing countries, including Vietnam, showed a decrease but the total volume from January to February recorded an increase.
China exports most of its steel to Southeast Asia and the Middle East. These two regions have accounted for more than 50% of China’s steel exports for more than a year now.
Southeast Asia still holds the leading position but there is a decline compared to the previous month: Southeast Asia remains at the top despite a February volume decrease of 18% compared to the previous month from key importers such as Vietnam, Indonesia, Malaysia…From January to February 2024, China’s exports to Southeast Asia increased by 31% to 4.34 million tons (3.32 million tons in the same period in 2023).
Vietnam is still the leading importer with nearly 1.86 million tons, a sharp increase of 117% over the same period last year. A source explained: “Even though domestic prices in Vietnam have decreased, the price of HRC imported from China is still competitive.”
However, Vietnam is feeling the heat of capital and liquidity problems as well as a general decline in global demand, especially from Europe, a key market for hot-rolled steel coil. Vietnam’s consumption will decrease by 5% in 2023. Additionally, factories are facing the burden of cheap imports from China.
Other Southeast Asian countries such as Indonesia and Malaysia, in an effort to reduce their dependence on China, are strengthening their own capabilities and also exploring alternative regions.
MENA finds China’s offers attractive: Middle East and North Africa (MENA), which is buying a lot from China, decreased by 19% compared to last month but total exports in the first 2 months of 2024 increased by 34% to 4.19 million tons. The Red Sea crisis is affecting supplies into the Middle East and Chinese traders expect freight and insurance costs to rise due to the disruption.
The Middle East has seen major infrastructure projects announced requiring huge volumes of steel.
The natural choice of import was China, not because it was the preferred choice but because India fetched higher prices and war-torn Ukraine faced its own challenges. themselves, two regions to which the Middle East supplies significant volumes.
EU buyers delay stock replenishment amid currency depreciation: Although China is not a big exporter to the European Union, volumes there fell 16% to 0.53 million tons. EU buyers remain cautious due to high inventories and weak end-user demand, delaying restocks. Additionally, the Euro lost about 1.9% against the dollar in February.
Oversupply supports high exports: China, despite maintaining a stable crude steel production trend in 2023 at 1,019 million tons, has seen a slight upward trend since the beginning of 2024. Output increased 1.60% in January-February 2024 to nearly 168 million tons, surprising the market, especially as domestic demand remains a challenge. Higher output is driven by, in the chicken-and-egg syndrome, consistently high exports. In addition, the performance of several downstream sectors improved, including manufacturing, infrastructure and automobiles, requiring higher output.
