Tokyo Steel resumed steel exports to China after a decade amid a slump in domestic demand. The company would continue exports to China if buyers offer attractive prices, said sources to Davis Index.
Chinese steel demand has surged driven by government-funded infrastructural projects. Post the COVID-19 outbreak, the Chinese government has been infusing funds every month to boost economic activities in the country. Thus, the appetite for steel remained strong in China, while other Asian countries are still struggling with slower end-user demand.
Tokyo Steel received an export order from China for the finished steel products mainly used for the construction of roads and houses. Davis learnt that the order is for around 100,000mt finished steel to be shipped in September. Domestic steel demand in Japan remains significantly low. With the postponement of Tokyo’s Olympic and the completion of Olympic-related construction activities has reduced steel demand in the country.
On Aug 18, Tokyo Steel rolled over its finished steel prices for September shipments. The company had last revised prices in July with H-shaped beams prices at JPY81,000/mt ($768/mt), steel bars including rebars at JPY59,000/mt and hot-dip galvanized steel coils at JPY70,000/mt ex-works. Other Japanese steelmakers including Nippon Steel and JFE could also be focusing on Chinese importers to offset a slump in domestic sales.
China’s steel imports
In July, Chinese finished steel imports almost tripled to 2.6mn mt from a year ago. Prices of finished steel sheets recovered above $500/mt cfr China from $480/mt in July-end and below $400/mt in April and May. Imports from India and South Korea also recorded a sharp rise in July. On the other hand, Chinese steel exports dropped 25pc to 4.18mn mt, according to official data.
Market participants are doubtful if Japanese steel exports to China will continue in the future. China still has excess capacities. Shifting of obsolete furnaces to EAF makers lowered capacity by 40mn mt in 2019 as against a projection of shutting 100-150mn mt capacity.