Lower steel prices and weak demand have prompted Chinese steelmakers to increase their sales abroad. China posted a record level of 6.85 million tons of net exports of steel products in May, up 10% from a month ago, customs data showed.
The export bump has caused heightened trade tensions with the U.S. and Europe, major destinations for such shipments. At 911 million tonnes (Mt), however, they are 13% higher than they were a year ago, says Macquarie.
Steel exports have set a new record in May, to 95 Mt (annualized). Export volumes have increased by 49% over a year. At the same time, imports declined 2% year on year. China in May has become a net exporter of steel by 80 Mt (annualized), coming near, for the first time, to the previous record set in August 2008.
Since the beginning of the year, net exports from China surged 42%, according to Citi analyst Ivan Szpakowski. Domestic demand relative weakness has prompted Chinese steelmakers to seek opportunities in foreign markets. Chinese low prices for ferrous products made exports easier and have also been boosted by wholesalers releasing their inventories. This sustained level of exports is expected to continue in 2014 and 2015, says the U.S. bank analyst.
After the summer, steel demand in China is expected to recover while supply growth is expected to slow. Steelmakers are again in difficulties, and they should limit their production, said Ivan Szpakowski.
Iron ore imports have also been extraordinarily high so far this year, customs data showed last week. Imports in the first five months rose 19% to 383 million tons. The government says it could be another year for record steel production in China this year.