China's steel exports have continued to increase year-on-year, despite the government's stringent carbon neutrality measures and the energy efficiency efforts that have led to production cuts among steel manufacturers. This rise occurs even as major markets enter their seasonal low demand periods. The surge in exports is primarily driven by sluggish domestic demand, leading Chinese steel companies to ramp up their exports.
According to data released by Chinese customs, China exported 7.827 million tons of steel in July, marking a 10.5% decrease compared to the previous month. However, this figure represents a 7.1% increase compared to the same period last year. Cumulatively, steel exports from January to July totaled 61.227 million tons, a 21.8% rise year-on-year.
The monthly decline in exports was attributed to weak demand from Asian countries due to seasonal factors, a construction sector downturn in advanced economies caused by high-interest rates, and heightened import restrictions like tariff increases. However, the year-on-year growth continued as Chinese steel manufacturers persisted in aggressively exporting to offset domestic sales declines.
While exports grew, imports of steel fell significantly due to declining domestic demand, spurred by a slowdown in manufacturing exports (a result of foreign policies aimed at containing China) and the continued slump in the domestic construction sector. In July, China imported 505,000 tons of steel, a decrease of 12.2% from the previous month and 25.7% year-on-year. Cumulatively, steel imports from January to July decreased by 6.7% year-on-year to 4.122 million tons, reflecting the long-term downturn in the real estate market and the broader decline in domestic steel demand.
Despite weak domestic demand, China's iron ore imports rose in July by 5.3% compared to June and by 10% year-on-year, reaching 102.813 million tons. This increase was driven by the need for Chinese steel companies to secure supplies in anticipation of the latter half of the year, as well as falling international prices. Cumulatively, iron ore imports rose by 6.7% year-on-year to 713.774 million tons, despite reduced crude steel production and domestic production project delays.
In the coal sector, imports also increased. Despite a decline in demand for metallurgical coal, heavy rains led to a rise in demand for thermal coal. As a result, July's coal imports totaled 46.209 million tons, up 3.6% from June and 17.7% year-on-year. Cumulative imports rose by 13.3% year-on-year to 295.779 million tons, reflecting increased demand for power generation.
Looking ahead, while Chinese steel manufacturers have begun implementing production cuts in response to government policies on carbon neutrality and energy efficiency since July, weak domestic demand is expected to drive continued aggressive exporting in the coming months. However, there are projections that if China's economic stimulus measures prove effective, domestic consumption may increase, potentially leading to a slight year-on-year decline in exports as global import restrictions on Chinese steel tighten.
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