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Turkey, Iran, Russia said eyeing potential gap in China steel export markets

  • Wednesday, February 12, 2020
  • Source:ferro-alloys.com

  • Keywords:Turkey, Inan, Russia, export
[Fellow]Turkey, Iran, Russia said eyeing potential gap in China steel export markets

[ferro-alloys.com]Turkish, Iranian and Russian steel mills are eyeing a potential gap in international markets should Chinese steel exports fall as a result of coronavirus-related restrictions, mill and trading sources say but caution that prices might still need to rise to boost this trade.

Sources in China said overseas orders for Chinese steel have been thin in February as falling domestic prices have put foreign buyers in wait-and-see mode on expectations that prices could fall further. Chinese traders are nonetheless confident of being able to meet the logistical challenges and are negotiating for March/April shipment, confident that buyers might not be able to find such competitive offers elsewhere, sources said.

China is by far the world's biggest steel exporter, but its exports have declined since 2016 due to domestic demand growth and its elimination of some excess capacity. Its steel exports fell 7.3% on the year to 64.3 million mt in 2019, according to customs data.

The Chinese domestic steel market on Monday fell to its lowest since the end of June 2017, S&P Global Platts data showed. Asian hot-rolled coil prices fell for the fourth straight session Tuesday in bearish markets despite several Chinese mills lowering export offers. Platts assessed SS400 HRC 3 mm thick at $463/mt FOB China Tuesday, down $5 on the day. On a CFR Southeast Asia basis, the same grade of coil was assessed at $463/mt, down $2 from the previous day.

Turkey seeks opportunities

Still, other origins see the situation as potentially offering fresh opportunities. An upturn in steel scrap prices last week after a 16% plunge in January was attributed by some sources to Turkish mills increasing production to sell more to Southeast Asia.

"The Turkish steel sector's exports to SE Asia recently rose notably," Turkish Steel Exporters' Association (CIB) Chairman Adnan Aslan said on the association's website. "Due to the coronavirus outbreak, Chinese market share in its active markets could fall, and this could create an advantage for Turkey."

Turkish exports to SE Asia typically rise when Chinese exports to the region fall, said Aslan, who is also a board member of Turkish long products steelmaker Icdas.

Turkish mills' exports to SE Asia rose notably last year after being effectively barred from the US market by a tariff hike. Turkish rebar exports to Singapore hit 589,000 mt in 2019, around 50% higher year on year, while wire rod shipments to that country roughly doubled year on year to 112,000 mt, according to Turkish Statistical Institute data.

Ugur Dalbeler, CEO of major Turkish steelmaker, Colakoglu, said that as the unease around coronavirus continues, "we could receive additional demand from some Chinese export markets...but as prices are also affected negatively, it could be limited."

Iran exports rise despite sanctions

Iranian mills are also on the look-out for new export destinations as trade with China may prove more complex than before, sources in Iran said.

Despite the US secondary sanctions imposed on steel trade with Iran, the main Iranian steel producers, excluding small private sector mills, exported 5.88 million mt of finished and semi-finished steel in the first 10 months of the current Iranian year (to January 20), a 25% increase on the year. A breakdown of destinations was not provided, but the bulk of Iran's exports go to SE Asia and the Middle East.

Stiffer sanctions imposed on Iranian steel in January have done little to stem the export flow. In the past month alone, exports totaled 675,000 mt, a 93% increase on the year, according to statistics from Iranian mines and metals group Imidro.

Chinese deliveries continue

So far, however, the delivery of overseas orders by Chinese mills has not affected by the virus outbreak, sources say. February's export shipments are mainly orders signed in December.

However, this could change if countries which are China's traditional steel customers enforce restrictions. The Philippines, for example, has stipulated that ships from China can only dock and unload there 14 days after leaving China.

Chinese prices may also rise. As various Chinese steel mills have begun to cut steel output -- some are reported to be cutting production by 20%-30% from the start of February -- traders expect Chinese steel prices may rebound toward the end of February and buying interest may grow.

(S&P Global Platts)

  • [Editor:王可]

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