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China’s November Steel Exports Fall Marginally

Mark O'Hara

Steel Stocks Inch Up, but Can It Last?

(Continued from Prior Part)

China’s November steel exports

On December 8, 2015, China’s customs department released the country’s trade data for November. In dollar terms, China’s imports fell 8.7% in November compared to the same period last year. The slowdown in imports points to the continued slowdown in the Chinese economy.

China’s exports also registered a YoY (year-over-year) fall of 6.8% in dollar terms in November. Falling Chinese exports are negative for the global economy. It points to a slowdown in the global demand.

Exports fall marginally

The global steel industry has been reeling under the impact of rising Chinese steel exports. However, in November, China exported 9.6 million metric tons of steel, which was a YoY decline of ~1%. Nonetheless, China has exported more than 100 million metric tons of steel in the first 11 months of 2015. That’s 22% higher compared to the corresponding period last year.

Cut in export taxes

Responding to falling exports, China has cut export duties on certain steel types, including billets. While billets are not a big component of China’s steel exports, the move has raised fears that similar benefits could also be extended to other steel products. According to Bloomberg, citing a Mysteel report, “China may reduce export tariffs on the more important steel reinforcement-bar and coils.”

Almost every steel association globally is crying foul over rising Chinese steel exports. Several countries have either imposed or are in the process of imposing anti-dumping duties on Chinese steel products. In an interesting move, India (EPI) is planning to fix a minimum import price for steel products to save its domestic steel companies from falling global steel prices.

US steel companies, including United States Steel (X), Nucor (NUE), AK Steel (AKS), and Steel Dynamics (STLD), have also filed several trade cases this year. Although US steel imports have tapered down in the last few months, it hasn’t had much impact on steel prices. You can read Why Are Markets Ignoring the Steep Fall in US Steel Imports? to explore this more.

The current upward price movement in steel stocks might not last long, as we’ll explore in the next part of the series.

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