- Chinese April Exports Up 30%
China has clearly and definitively retaken its position as the world’s largest exporter with steel exports up sequentially some 30% in April, and up a whopping 205.7% from year-ago levels. Both net and gross Chinese exports rose again in April, up some 69.8% and 29.4%, respectively, from March. To put the magnitude of the increase into perspective, April steel exports were actually higher than the total for the entire second quarter of 2009, and the highest level since October 2008.
- All Steel Imports Drop in the Month
We were surprised and disappointed to see a decline in all types of imports in China during the month. Finished steel imports declined 8.0% from March, while semi-finished steel imports declined as well, down some 25.0% sequentially.
- Turning Gold Into Straw
Chinese exports are running at new highs as Chinese steel production is on pace to hit a 20% uptick from previous all-time highs for the last year. We’re concerned that while production costs in China are surging, and Chinese steel mills claim they can’t meet the new costs, nevertheless, China is importing high-cost raw materials, adding energy and inefficient capital – and then exporting the high-cost finished product back into the West.
- Turning Gold to Straw Not Viable Business Plan
Clearly, rhetoric about the need for production cuts in China due to surging raw materials price is just that – talk. At current production rates, the country is on target to melt some 675mt for the full year, up a whopping 20% from the previous all-time high in 2009. Astonishing to us given the ongoing litany of complaints about “unfair” high iron ore prices the nation must import in order to feed its hungry steel mills. The logic of importing expensive ore and exporting dumped steel – at prices generally below production costs – is less than obvious to us.
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