Weak domestic demand, steel turned to export

Since the Spring Festival, almost all industries in China have postponed construction, causing domestic demand to plummet. However, due to the special nature of steel mill production, production cannot be stopped in a timely manner. Therefore, under the background of poor domestic demand, many steel mills choose to sell excess steel abroad.

The latest statistics show that China exported roughly 30,000 tons of steel bars in January. However, in the past 10 days, about 160,000 tons of steel bars were sold to Singapore, Hong Kong and South Korea.

It is understood that recently Chinese steel mills are actively selling to Southeast Asia, and the quotations are competitive. The quotations are 410-415 USD / ton (CFR). At the same time, the CFR quotes in Russia and Ukraine are 425-430 US dollars, and their competitiveness is weak, while the Turkish quotes are too high for steel companies to buy, because the FOB price is already 435 US dollars. Platts pointed out that Iran's steel billet is still the most competitive, with CFR prices of $ 415-420 per ton, but it is worth noting that US sanctions on Iranian steel are still ongoing.

Although Chinese steel prices are low, most buyers remain cautious when buying Chinese billets. Because many people think that if China's domestic demand rebounds and steel prices rebound, people still worry that sellers will not fulfill their export contracts. Perhaps similar to the 2017 case, when domestic steel prices soared, export contracts could not be fulfilled. Traders also said that Chinese steel companies are also paying attention to the resumption of domestic work. Once Chinese demand picks up and steel prices rebound, Chinese steel mills will make more profits in the country.