China to cut 2021 steel exports under green shift: SIFW

China's steel exports will fall this year under a government policy to cut or maintain crude steel output at 2020 levels, a top executive at major producer Hebei Iron & Steel (Hesteel) said.

The country's steel exports are expected to decline in 2021 compared to last year, while imports of finished and semi-finished steel products will increase, Mu Guoqiang, head of steel import and export at Hesteel, said during a panel discussion at the Singapore Exchange's virtual Singapore International Ferrous Week (SIFW) 2021.

This is in line with Beijing's goal to achieve carbon neutrality by 2060 that will require its steelmakers to cut production over the period.

The mid-year policy change will require a significant slowdown in China's steel exports, which rose by 30pc to 37.38mn t in the first half. That is an annualised pace of 74.76mn t, which is 39pc higher than the 53.68mn t exported in 2020.

China's steelmakers, especially state-owned mills like Hesteel, have no other choice but to follow the policy to cut output and exports, he said.

Mu's view is in line with that of market participants surveyed by Argus. An east China mill has already been informed by local officials to maintain zero growth in its steel exports compared with last year. Another mill in the same region has been required to shut down six blast furnaces after its first-half output greatly exceeded year-earlier volumes. The mill has stopped stop making export offers and will only negotiate on a case-by-case basis, market participants said.

Major Chinese mills have stopped quoting coil export offers, forcing Vietnamese buyers to chase Indian deals that [pushed the Asean hot-rolled coil (HRC) index up by $8/t to $918/t yesterday](HRC).

Chinese domestic prices are at a wide discount to overseas steel prices, but its mills also face obstacles to obtaining credit and high-cost raw materials, leaving no profit for mills, especially the large producers, Mu said. The Argus Chinese HRC Shanghai index was at 5,780 yuan/t ($893/t) ex-warehouse yesterday, while the US Midwest HRC domestic price is much higher at an equivalent of $2,006.21/t.

Others are looking to fill the supply gap left by China in seaborne steel markets.

The potential for more low-priced steel exports from India to Asian countries could be another threat to global steel markets including China, trading firm Duferco's managing director Subhendu Bose said during the panel discussion. Many vessels heading from India to EU are waiting at ports with cargoes not being cleared, as Indian mills have already fulfilled their export quota into the EU and are waiting for a new fourth-quarter quota to be announced.

The oversupply of Indian steel may find ways to other Asian countries where domestic demand has slowed because of spreading Covid-19 cases, he said.

Indian mills sold 40,000-50,000t of SAE1006 grade coils into Vietnam last week at $915-925/t cfr, much lower than their official offers of $990/t cfr two weeks earlier, Argus data show.