China steel exports could fall further in 2018: Top executive

A worker stands in a steel workshop in Zouping, in China's eastern Shandong province on March 10, 2018.
A worker stands in a steel workshop in Zouping, in China's eastern Shandong province on March 10, 2018.PHOTO: AFP

BEIJING (REUTERS) - Chinese exports of steel products might continue to fall this year due to strong domestic demand and reductions in capacity due to environmental commitments, the chairman of state-owned mill Fujian Sangang Group Co Ltd said.

The prediction follows a 30.5 per cent plunge in Chinese steel exports last year to 75.43 million tonnes, as strong domestic prices and high profits at home led to a drop in shipments abroad.

The supply and demand trends are now more in line following the supply-side reforms "while most of the downstream sectors have shown signs of recovery", Li Lizhang told Reuters on the sidelines of China's annual parliament session on Saturday (March 10).

His comments come after US President Donald Trump signed an order for 25 per cent tariffs on steel imports and 10 per cent for aluminium at the White House on Thursday to counter cheap imports, especially from China, which he described as "an assault on our country". But only a fraction of China's steel production is directly shipped to the United States.

Domestic demand from property, infrastructure, manufacturing and shipbuilding sectors will increase, Li said, while steel supply would also see small pick-up this year compared to 2017.

China, the world's top steel maker, produced 831.73 million tonnes of crude steel last year. It aims to eliminate around 30 million tonnes of excess capacity as part of Beijing's steadfast effort to curb air pollution.

Cities across the country are carrying out stringent measures to lower fine particulate matter (PM2.5) readings. The steelmaking hub of Tangshan in Hebei province said it will extend production restrictions for another eight months after current curbs expire next week.

Li said production curbs would not be limited to the smog-prone region of Beijing-Tianjin-Hebei: "Other regions will also see restrictions if pollution levels exceed the limits." Despite this, steel prices would not see a big fluctuation, he said, as steel mills have already prepared for "the new normal".

Fujian Sangang, the biggest producer in southeastern China, has a total capacity of 11 million tonnes. It produced 11.19 million tonnes of steel products last year, and plans to produce 10.8 million tonnes in 2018.