Exports are blocked and there is excess capacity, where is the road for china’s stainless steel industry?

In 2017, China exported 75.41 million tons of steel, including 1.18 million tons of exports to the United States, accounting for only 1.6% of total exports. In fact, with the increase in trade frictions, anti-dumping, and anti-subsidy, the proportion of steel exported directly to the United States in recent years has gradually declined. In 2016, the ratio was only 1.1%. Therefore, from the perspective of direct impact, this time the impact of U.S. import tariff adjustments on China’s steel exports is relatively limited, but the indirect effects and long-term effects are greater. In 2017, China exported 75.41 million tons of steel, including 1.18 million tons of exports to the United States, accounting for only 1.6% of total exports. In fact, with the increase in trade frictions, anti-dumping, and anti-subsidy, the proportion of steel exported directly to the United States in recent years has gradually declined. In 2016, the ratio was only 1.1%. Therefore, from the perspective of direct impact, this time the impact of U.S. import tariff adjustments on China’s steel exports is relatively limited, but the indirect effects and long-term effects are greater.

As the world’s two largest economies, China is a major exporter of steel and the United States is a major importer. The tariff adjustment has a major impact on the supply and demand patterns of the two countries. Because the United States imports directly from China are relatively limited, the market generally believes that China’s steel exports to ASEAN, South Korea, etc., have been exported to the United States after transit trade and processing. According to a report from the US Department of Commerce, in the United States, a total of 35.93 million tons of steel were imported in 2017, and the top 20 sources of steel products accounted for 91% of the total. These countries are also major destinations for China’s steel exports. For example, in 2017, the United States imported a total of 3.65 million tons of steel from South Korea, while China exported 11.4 million tons of steel to South Korea, accounting for 15% of China’s exports that year.

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By 2017, the growth rate of domestic stainless steel exports continued to slow by about 12 percentage points to 3.5%. Stainless steel products exported to the United States continue to be low. As global stainless steel supply is currently in surplus, China has a more serious overcapacity than the world. As trade frictions between China and the United States gradually increase, not only will the United States continue its anti-dumping policy on stainless steel products in China, but other countries may continue to increase anti-dumping investigations on stainless steel in China.
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For stainless steel end products, the machinery manufacturing sector accounts for about 40% of the consumption of stainless steel, medical and some metal products for 20%, and transportation accounts for 10%. Therefore, with the continuous escalation of trade frictions, exports of Chinese stainless steel end products may be affected, which will also increase the domestic stainless steel market surplus.

Source: China Steel Pipe Manufacturer – Yaang Pipe Industry Co., Limited (www.metallicsteel.com)

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