China became a net steel importer for the second straight month in July, despite a 9% year-on-year rise in steel production for the month, according to customs data released Aug. 26.
According to market sources, China may remain a net steel importer in August, but may return to a net steel exporter sometime in the fourth quarter.
In July, China imported 2.46 million tonnes of semi-finished carbon steel products, mainly billets and slabs, up 4% from June. In addition to finished steel imports, China’s total steel imports in July totaled 5.06 million tonnes, exceeding July steel exports by 4.18 million tonnes, customs data showed.
Steel imports in July were mainly driven by orders placed in May, when domestic steel demand in China rebounded sharply as the infrastructure and real estate sectors were supported by monetary and tax incentives.
Other markets were still locked in or recovering from the impact of the coronavirus pandemic at the time, sources said, making China a very attractive destination for steel.
However, since July, China’s import orders for steel have declined and export orders have improved.
This is due to the fact that overseas markets have gradually resumed their activities, and domestic demand in China has decreased due to rains, floods and high temperatures, market sources said.
Orders placed from July will be shipped from September.
Some market sources said they have seen almost no import orders for steel semi-finished products lately, while flat steel export orders have improved since July and the wire rod export business has also improved since August.
“Our customers in Southeast Asia have started purchasing wire rod again since August, and orders received in August have recovered to about 40% of normal volume before the coronavirus outbreak hit the global economy,” said a source at one plant in East Asia. China.
In addition, since July, China has tightened monetary stimulus and tightened restrictions on the real estate sector, which will put downward pressure on China’s domestic steel market in the second half of 2020.
Some sources say China will have more steel export opportunities in the second half of 2020 than it did in the first half of the year.