China became a net steel importer for the first time in 11 years

China became a net steel importer for the first time in 11 years in June, despite record daily steel production for the month.

This indicates the extent of the Chinese-fueled economic recovery that has boosted domestic steel prices while other markets are still recovering from the impact of the coronavirus pandemic.

In June, China imported 2.48 million tons of semi-finished steel products, mostly billets and slabs, according to state media citing data from Chinese customs released on July 25. In addition to imports of finished steel, China's total imports rose to 4,358 in June. million tons, which exceeds the export of finished steel in June by 3.701 million tons. This made China a net steel importer for the first time since the first half of 2009.

Market sources said that Chinese imports of semi-finished steel will remain high in July and August, while steel exports will remain low. This means that China's role as a net steel importer may continue for some time.

China produced 574 million tons of crude steel in 2009 and exported 24.6 million tons this year, according to China's customs service.

China's crude steel production hit a record 3.053 million tonnes per day in June, and 1.114 billion tonnes year on year, according to the National Bureau of Statistics. The mill's capacity utilization is estimated at 91% in June.

S&P Global Platts predicts China's steel production will grow 2% year on year in 2020.

In 2015, China exported a record 110 million tons of finished steel, which put strong pressure on global steel prices. Exports have declined since 2016, and China is likely to export less steel this year than last year's 65 million tonnes.

Inventories of finished steel in China at steel mills and spot markets in 20 CISA-controlled cities rose about 10% year-on-year by the end of June, indicating abundant steel inventories.

However, import growth was in line with market expectations as China was the first country to emerge from the COVID-19 lockdown, so its economic recovery and steel demand temporarily outpaced overseas markets, triggering an influx of steel.

More importantly, China's loosening of monetary policy and easing lending in the first half of 2020 boosted the infrastructure and real estate sectors. Traders began to make speculative purchases in anticipation of a further increase in liquidity, which will lead to an increase in demand for real estate and infrastructure in the second half of the year.

These two sectors account for over 55% of total steel consumption in China. Traders with lots of cash flows were more than willing to buy.