China’s steel exports
China is the world’s largest steel exporter. In the last few years, higher Chinese steel exports have been global steel prices’ (MT) nemesis. Globally, steel associations have accused China of dumping their markets with cheap steel that’s allegedly subsidized by the Chinese government. Notably, China has massive steel overcapacity, which was also mentioned in G20 meetings. US steel producers including U.S. Steel Corporation (X), AK Steel (AKS), and Nucor (NUE) have managed to get tariffs imposed on several Chinese steel products.
Due to pressure from its trading partners, China has taken measures to address its steel overcapacity. China permanently shut down some of the illegal steel capacity. Along with the permanent plant closures, the country is also curtailing some of its steel plants in the winter months. The cuts that started in mid-November are expected to last until March 15.
China’s plant closures and better-than-expected domestic demand led to a sharp decline in China’s steel exports last year. The trend has continued in 2018 as well. After falling 37.3% YoY (year-over-year) in January, China’s steel exports fell 15.6% YoY in February. Another encouraging aspect is that China’s steel exports have been less than five million metric tons for two consecutive months. China’s steel exports were 11.2 million metric tons in September 2015.
While China’s actions to address steel overcapacity have started to show in its steel exports data (CLF), aluminum has been a different story.