In the first half of 2022, China's steel exports and imports showed a trend of simultaneous contraction year-on-year. Many industry analysts believe that the challenges facing the future development of the industry are still great, and the growth rate of China's steel exports is likely to continue to decline in the second half of the year.

Mao Lin, a steel analyst at the Steel Business Group of Shanghai Iron & Steel Union , told the Financial Associated Press that China's steel exports are currently facing three major challenges: the downward pressure on global steel demand is significant, and the overall trade flow is slowing down; the Southeast Asian market will move towards self-sufficiency and consolidation for a long time. The supply role of primary products; the expected goal of high-quality development and stable growth, which puts forward higher requirements for the import and export of the steel industry, including the choice between export volume/export benefit.

At the 2022 (1st) China Steel Overseas Development Forum held in Hangzhou recently , many industry experts agreed that China's steel productivity and consumption have reached a plateau, and China's steel consumption will enter a rather long stock development in the future. At this stage, the "One Belt, One Road" is the preferred direction for the transfer of the steel industry in the future.

In the future, steel exports will be reduced to less than 50 million tons

According to data from the Customs Administration, China exported a total of 46.296 million tons of steel from January to August, down 3.8% from the same period last year. Among them, the export of steel products in August was 6.153 million tons, a decrease of 7.8% from the previous month. At the same time, the global manufacturing PMI in August was 50.9%, a decrease of 0.3 percentage points from the previous month, a month-on-month decline for three consecutive months, and a new low since July 2020.

Mao Lin pointed out that judging from the known orders received, it is expected that exports in September and October will continue to decline month-on-month. Among them, the export of finished steel products in September will decrease significantly month-on-month and should be below 5.5 million tons; the increase in shipments in November and December may increase. more significant. However, global energy problems could worsen or further depress demand after the winter. Therefore, the incremental space for China's steel exports in the fourth quarter is also relatively limited.

Mao Lin predicts that the export shipment of finished steel products in the third quarter will be lower than that in the second quarter, and the overall export volume will be about 18.5 million tons; the total export volume in the fourth quarter may still be lower than that in the third quarter, about 16 million tons or less. For the whole year, the total export volume is expected to be more than 65 million tons, a slight decrease of 5% or less than last year.

Duan Zhibai, managing director of Shagang Group Europe Co., Ltd., told the Financial Associated Press that the steel industry will be affected by the state's policies to promote exports and reduce exports of the steel industry. It is expected that the number of exports will decrease and the number of imports will further expand. An industry insider, who did not want to be named, bluntly told the Financial Associated Press that my country's steel exports will be reduced to less than 50 million tons in the future.

What are the international factors that are currently favorable to my country's steel exports? Mao Lin said that the current favorable factor for China's exports is the seasonal demand recovery in some overseas regions, including India, Japan, Vietnam, South America and other places. The local prices have shown a certain trend of stabilizing and even rebounding. Section steel mills began to try to increase. In addition, with the implementation of the fifth round of interest rate hikes by the Federal Reserve, the global supply and demand situation has intensified, and the cost advantage of the Asian region may promote the supply role of the region, which is generally beneficial to China's steel exports.

At the same time, there are also many disadvantages. Mao Lin pointed out that due to the influence of geopolitical conflicts in the global supply chain, there was a shortage of supply in some regions in the second quarter, which led to the window period of steel exports from China, India, Turkey and other countries, which basically showed a substantial increase. With the skyrocketing prices, overseas crude steel production has steadily increased, while demand has gradually weakened, and prices have also been realized under the unfavorable fundamentals of supply and demand.

"Although large European steel mills have implemented production cuts since September, the Asia-Pacific region will maintain high production enthusiasm and increase exports to Europe to fill the local supply gap with a certain price advantage. However, there is not much local demand. The situation of oversupply is still obvious, and the Asian market has often experienced inflated quotations and low real orders recently." Mao Lin said.

In addition, the uncertain direction of the conflict between Russia and Ukraine has also increased the variables in the international market. Mao Lin believes that when Russia is facing huge economic pressure, steel companies may be willing to maintain thin profits, continue to cut prices if necessary, and actively seek export sales, including Turkey, India, some markets in Southeast Asia and China. The direction of the final trade flow is not very clear, but at present, there is a certain restraint on China's export volume.

"The Belt and Road" has become the preferred direction for the transfer of China's steel industry

Luo Tiejun, vice president of China Iron and Steel Association, believes that today's global industrial chain is at a critical stage of restructuring, especially in countries along the "Belt and Road", where per capita steel consumption has great potential, and various factors are available in terms of cost. The steel industry has certain advantages.

Hu Zhichun, deputy secretary of the party committee and deputy general manager of China Metallurgical CCID Engineering Technology Co., Ltd., also said that from the perspective of the supply and demand of steel in the countries along the "Belt and Road", it represents the fastest-growing area of steel in the world. Both the output and demand of China maintain a relatively high growth rate, which is faster than the overall growth rate of the world. "From a regional point of view, the fastest growth in consumption is in Southeast Asia and South Asia. The economic development of Southeast Asia in the past 10 years, especially the growth of steel production, has almost doubled, but there is still a gap of nearly 40 million tons of steel, which is not enough for the whole country. It's a very important opportunity for the steel industry."

Zhong Shaoliang, deputy director general of the World Steel Association, said that by 2035, the demand for steel in Southeast Asia will increase from the current 75 million tons to 190 million tons, which will probably double; India has an increase of about 100 million tons to 300 million tons. "In the next 15 years, there will be an increase of 100 million tons in India and an increase of 100 million tons in Southeast Asia. The increase in these two regions will make up for the decline in Chinese consumers."

As the global steel production and consumption center, China's crude steel output ranks first in the world for 26 consecutive years. Ren Zhuqian, vice president of Shanghai Steel Federation , believes that the global steel production areas and major incremental areas are shifting, and the expansion of steel production capacity in India and Southeast Asia will become more and more obvious in the future. "In the past, the transfer of steel production increments was mainly oriented to meet domestic demand. The new round of transfer may be oriented to global demand, and the proportion of steel indirect exports in production will continue to increase."

According to Zhang Longqiang, Secretary of the Party Committee and President of the Institute of Metallurgical Industry Information Standards, in recent years, overseas direct investment in China's steel industry has been mainly distributed in South Asia and Southeast Asia, and overseas project contracting areas are mainly distributed in Vietnam, Indonesia, Malaysia, Iran, Algeria, etc.

Mao Lin told a reporter from the Financial Associated Press that the utilization rate of local production capacity in Southeast Asia has not been very high, the cost is moderately low, and there is a certain potential for increasing production, and the demand has not improved much at present, if it continues to gain relatively considerable gains in the European market Profits, then the overall supply in the region may be loose, which is also a long-term negative factor for China's traditional steel exports.

Steel exports must turn to high value-added products

It should be pointed out that at present, my country's steel exports are dominated by plates, supplemented by long products. According to Mysteel 's market research, China's sheet metal exports mainly rely on price advantages to win, and cannot rank among the ranks of high-end products in overseas markets, so the export volume of sheet metal always ranks first in the world; while long products are directly supplied to overseas Belt and Road projects as the Lord, the actual market circulation is not much.

In response to the development trend of international trade in the iron and steel industry, Duan Zhibai believes that the global steel price has shown a weakening trend recently, the price difference at home and abroad has further narrowed, price competition is fierce, and the proportion of steel exports from other countries has increased. Under the blessing of China's "dual carbon" policy, the export of steel is bound to change from winning on price to gaining advantages on product quality and at the same time exporting to high value-added products.

Zhong Shaoliang, Deputy Director-General of the World Iron and Steel Association, pointed out to the Financial Associated Press that from the perspective of the World Iron and Steel Association, the current and future development trend of the steel industry is green, low-carbon and sustainable development. Carbon emissions have attracted more and more attention from the outside world. Traditional steel production enterprises need to attach great importance to their low-carbon development strategies, implement low-carbon strategies as soon as possible, and promote the low-carbon development of steel and steel-related industries.

"Many companies take this as a slogan, but almost many foreign companies take this as the core of their future development. Therefore, we must strictly abide by the principle of compliance operation and attach great importance to the overseas business environment, which is currently the most The important thing is the 'double carbon' issue, and we must pay attention to the communication with various stakeholders. We must find a more reasonable way to deal with the impact of the new production capacity on the local market." Zhong Shaoliang said.

However, due to the European energy crisis, "carbon neutrality" appears to be being reversed. Wang Xuanyue, a researcher at the Steel Business Group of Shanghai Iron and Steel Union, told the Financial Associated Press that natural gas problems in Europe are mostly linked to the international political situation. Judging from the recent trend of major economic indicators in Europe, energy gaps and energy costs have already caused economic development. Negative feedback. At this stage, Europe's deficiencies in protecting people's livelihood and new energy construction will be forced to increase carbon emissions. European countries such as Germany and Denmark have announced that they will abandon their 2025 carbon neutrality goals.

"However, the state at this stage is not stable, and changes in the international situation are unpredictable. Natural gas in Europe may return to normal quickly in terms of volume and price, and it may also continue to deteriorate and lead to overall restrictions on industrial production. At that time, the logic of carbon emissions will once again welcome Come and convert." Wang Xuanyue said.

According to Sun Hongbo, deputy general manager of China Minerals Co., Ltd., the trend of global double carbon has become one of the main challenges facing steel companies. "Whether we invest in domestic smelting or overseas, we will encounter carbon problems in the future."