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Advantage US Steel as Chinese Exports Continue to Fall

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Chinese steel exports

China exported 8.1 million metric tons of steel in November 2016, a fall of 16.0% YoY (year-over-year). Exports fell 14.6% YoY in October. The country’s steel exports have fallen for four consecutive months. They fell ~1.0% in the first 11 months of 2016 compared to the corresponding period in 2015.

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Trade actions

Steelmakers globally have been up in arms against Chinese imports. After acting against direct Chinese steel imports, the U.S. Department of Commerce is now investigating transshipments of Chinese steel products from Vietnam.

The European Union has slapped anti-dumping duties on some Chinese steel products. India has extended the minimum import price for its steel products to fend off cheap Chinese steel from its borders. As outbound locations continue to dwindle for Chinese steel products, we’ve started to see some moderation in the country’s steel exports.

Positive for US steelmakers

The steep fall in Chinese steel exports coupled with rising raw material costs could support US steel prices. US steel prices have risen significantly this month after Donald Trump won the US presidential election. Prospects of higher demand and Trump’s tough stance on imports bodes well for US steel producers (XME).

Sagging demand and higher imports have been some key challenges for steelmakers, including United States Steel (X), ArcelorMittal (MT), AK Steel (AKS), and Nucor (NUE). Lower Chinese steel exports would help improve market sentiment and provide the necessary pricing power for steel companies.

The global aluminum industry has also been battered by Chinese exports. In the next part of this series, we’ll see how much aluminum China exported in November.

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