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How to Read China’s April Steel and Aluminum Exports

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Steel exports

On May 8, China released its trade data for April. The country exported 6.33 million metric tons of steel in April—similar to March. However, the imports fell 2.3% YoY (year-over-year) in April. China’s steel exports rose 12% YoY in March to the highest level since June 2018. In the first four months of 2019, Chinese steel exports have risen 7.4%.

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While US steel imports have fallen since the Section 232 tariffs, some of the other regions continue to reel from the impact of import deflection after the US tariffs. Recently, ArcelorMittal (MT), the leading steel producer globally, announced the temporary idling of some of its capacity in Europe due to record steel imports in the region. U.S. Steel Corporation (X) has operations in Central Europe. AK Steel (AKS) and Nucor (NUE) get most of their revenues from US markets.

Aluminum exports

While Chinese steel exports have fallen from their peak, the country’s aluminum exports continue to make new records. After hitting a new high in 2018, China’s unwrought aluminum exports hit a record monthly high of 550,000 metric tons in March. There was a slight tapering of Chinese aluminum exports last month. The Chinese aluminum exports fell 9.5% month-over-month. However, the exports rose 10.4% YoY in April. In the first four months of 2019, China’s unwrought aluminum exports have risen 13%—compared to the same period in 2018.

Last year, President Trump imposed a 10% tariff on US aluminum imports. During the first-quarter earnings call, Alcoa’s (AA) CEO Roy Harvey said that “tariffs have not solved the industry’s challenges, which stem from highly subsidized smelting capacity in China, that has resulted in surplus production.”

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