Reasons for the fall in steel exports from China

Trade measures targeting China have already been implemented around the world and are hurting the country's ability to export steel abroad. But this is mainly caused by domestic politics, which is responsible for the drop in exports, since millions of tons of basic construction steel are closed by the government, and in the conditions of a slowdown in the credit and infrastructure sector, high demand is maintained in the country. Net exports could fall to 50 million tons next year, according to Goldman Sachs Group Inc.

“The lower exports are due to strong domestic demand, as well as prices that do not motivate manufacturers to export,” said analyst Zhu, who recently returned from a tour of China, where there are signs of shortages of some steel products, leaving little chance for foreign sales. In June, exports fell to 6.81 million tons, from 10.94 million tons a year earlier.

The deterioration in China's exports stands in stark contrast to aluminum shipments, which were up 21 percent in June and year-to-date to 460,000 tonnes, the highest in May since 2013. In the first six months, volumes increased by 5.9 percent to 2.41 million tonnes. Prices, which are up 12 percent this year in London this year, have helped boost output, which could be cut if the government continues with plans to close unauthorized factories or restrict production during the winter months.

Robust demand for steel is boosting iron ore imports to China. Inbound supplies of raw materials rose 9.3 percent to 539 million tons in the first half of the year compared to last year, according to customs officials. June shipments totaled 94.7 million tons from 91.5 million tons in May and 81.6 million tons a year ago.