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China’s Weak Steel Market Pushes Exports to Four-Month High

China’s steel exports surged to a four-month high as oversupply in the world’s biggest market and better external demand spurred mills to ship a surplus overseas.

Outbound shipments rose 14 percent in May from a year earlier to about 9.2 million metric tons, according to China’s customs administration. That’s the highest since January, reflecting continued sluggish demand in China amid a modest seasonal recovery in key export markets.

“I’m not saying demand is great in the overseas market, but the reason China can export is because its pricing is still competitive,” said Helen Lau, an analyst at Argonaut Securities said. “We forecast a 25 percent increase in exports this year. From our conversations with Chinese steelmakers, some of them are planning to increase exports 50 percent.”

Exports in the first five months of the year surged 28 percent from a year earlier to a record 43.5 million tons. A sharp downturn in construction activity linked to a weak Chinese property sector has hurt domestic steel demand, pulling prices down 16 percent this year.

Average spot prices of reinforcement bar, used in construction, are at their lowest level since Beijing Antaike Information Development Co. began compiling data on the market in 2003.

Rebar for October delivery on the Shanghai Futures Exchange fell 0.3 percent to 2,335 yuan ($376) a ton at 2:18 p.m. in Hong Kong.
Source: Bloomberg