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China's appetite for steel leaves it less to sell abroad

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TOKYO — China has less steel to ship to other countries now that a crackdown on substandard products has slashed capacity while infrastructure builders and automakers continue consuming the key material at home.

Steel exports amounted to 75.43 million tons in 2017, tumbling 30.5% from 2016 to a four-year low, shows data released Friday by the General Administration of Customs. The tally missed the 100 million ton mark for the first time in three years.

To ease a supply glut, President Xi Jinping’s administration has cracked down on illegal production of low-grade steel. Such output, said to have reached some 80 million tons, was apparently eliminated almost entirely by the end of June. This reduced supply for the domestic market, where demand remains strong with investments in railways and other infrastructure and rising automobile production. As a result, export capacity fell.

The decreased supply of Chinese steel in East Asia has led to low availability of cheap steel from South Korea, and prices in Japan are on the rise.

“Chinese demand remains extremely strong,” said Kiyoshi Imamura, a Tokyo Steel Manufacturing managing director who visited China in December. “I even heard that a Chinese steelmaker will be importing billets, a semifinished product. I don’t think there will be any loosening of the supply-demand balance that would start in China in 2018.”

(Nikkei)