Mineweb reported that just one month ago, overseas steel market participants were very concerned about a flood of Chinese steel exports to further depress the already very depressed steel prices in major developed countries. For the moment, those concerns seemed unwarranted.

Chinese steel exports have become more expensive, thanks to the recent local price rally, which has narrowed the price differential between the overseas and domestic markets.

The surge in local steel prices and the recovery in production over the past two months have raised a flood of inquiries into the potential end user demand turnaround, caused by the stimulus package. From the available data and ground contacts, we have not yet seen the fundamental demand improvement due to the stimulus package, although it may soon come through.

The provisional Chinese customs data show that in December, Chinese finished steel exports increased from November by 9% to reach 3.2 million tonnes which was still 34% lower YoY. For 2008, Chinese steel exports reached 57.7 million tonnes, down by 7.2% from 2007, while the total steel import dropped by 16% from last year to 43 million tonnes.

The latest iron ore statistics showed that some stunning trends. Chinese imports in December defied the doomsayers by reaching 34.53 million tonnes, around 10 million tonnes more than expected, bringing annual imports to a staggeringly high 444.14 million tonnes up 15.8%, or 60.4 million tonnes YoY.

Over the past week, the upward move in Chinese steel prices seems to be losing some momentum. The hot rolled coil price was reported at USD 508 per tonnes ex-Vat, unchanged from last week and cold rolled coil dropped by 1.1% WoW to USD 579 per tonnes ex-Vat. Rebar prices have increased marginally by 0.6% from last week to USD 455 per tonnes ex-Vat, but a 20 millimeters plate price was quoted at USD 468 per tonnes ex-Vat, unchanged from last week.

The Lunar New Year is coming in one week and it is the year of the Ox, so we expect our readers to have a bull year in 2009 steel prices have remained up for 5 weeks in Chinese market, which is resulted in decreased competency in world market.

China now is facing much more pressures especially from Russian Federation. Since last month, China increased its HR price reversely to declining international prices, which is quoted for USD 100 per tonnes to USD 200 per tonnes higher than Russian mills.
More, China’s up trended currency and stricter trade protection policies have damaged Chinese steel export seriously. In last quarter in 2008, anti-dumping tariff were added on Chinese steels from North America, India and EU respectively.