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China’s Recovery, an On-time Help to the World: Is ASEAN one of the Beneficiaries?

Posted on 06 April 2021

Amidst the disastrous situation of the COVID-19 pandemic, while steel industry was badly hit, the better-than-expected recovery in China is helping many steel companies worldwide. Surprisingly, many steel companies enjoy boosting up their production to export to China. 

China’s finished steel import dropped from 13.1 million tonnes in 2018 to 12.2 million tonnes in 2019, just before the COVID-19 pandemic started. However, starting from September 2019 onwards, China’s steel imports picked up to above a million tonnes a month and the volume surged to above 2 million tonnes a month in the second half of 2020. Most of the imports were lower end carbon steel products, which are cheaper than local products. 

Most of the regions in China that imported a bulk of steel are from the eastern coast provinces. One of the main reasons for the significant increase in China’s steel import is the fast recovery in China from the pandemic. In the meantime, the logistics restrictions during the lockdown which hampered the movement of goods and so these gave rise to the need of imports when the recovery taking place. 

China’s import of semi-finished steel surged dramatically, by six folds from 3 million tonnes in 2019 to 18.3 million tonnes in 2020. Import from Russia was 3.16 million tonnes, followed by import from Vietnam (3 million tonnes), India (2.99 million tonnes), Indonesia (1.76 million tonnes) and Malaysia (850,199 tonnes). 

Imports of long steel registered significant growth rates of three digits in the year. Import of bar rose from 470,900 tonnes in 2019 to 1.6 million tonnes in 2020. Malaysia became the largest source of bar import for China, at 1.16 million tonnes in 2020 (70% of total bar import), an increase of 1,700 tonnes in 2019.

China’s wire rod import surged from 586,784 tonnes in 2019 to 1.46 million tonnes in 2020. The largest source of wire rod imports in 2020 was Malaysia, at 677,144 tonnes, a nearly half of total wire rod import in the country. Other sources of import were Japan, Indonesia, South Korea and Vietnam, respectively. 

Section imports into China increased by a double-digit growth rate of 16% y-o-y to 224,037 tonnes in 2020. Nearly half of the import was from Japan, followed by Turkey (30,677 tonnes) and Germany (15,723 tonnes). 

Flat steel import in China remained significant in 2020. Hot rolled plates import rose 35.7% y-o-y to 2.5 million tonnes in 2020. The largest source of import remained Japan, at 40% of total plate import in 2020, followed by the import from South Korea (32% of total plate import). Indonesia became the third largest source of import, at 455,759 tonnes in 2020, an increase from 19,973 tonnes in 2019. 

Hot rolled coil import increased by more than double in volume to 7.4 million tonnes. Four major sources of HRC import, of which the volume exceeds a million tonnes, include India, Japan, South Korea and Taiwan. The emerging sources of HRC import for China were Russia, Ukraine and Vietnam. These three emerging sources had no plate export to China in 2019 and the export volume exceeded 200,0000 tonnes in 2020. 

Cold rolled import surged by nearly a million tonnes to 3.8 million tonnes. Nearly half of the import was from South Korea., followed by import from Taiwan and Japan. Indonesia became the fourth largest source of CRC import, at 342,263 tonnes, an increase of more than three folds in volume in 2020, which was the import of stainless cold rolled coil. 

As for the import of coated sheet in China, most of the products registered a decline in import in 2020, except import of Tin free and Galvalume. All in all, coated sheet import in China declined 17.3% y-o-y to 2.4 million tonnes in 2020. Major sources of import remained South Korea, Japan and Taiwan. 

China’s import of seamless pipes increased 9% y-o-y to 151,388 tonnes in 2020. A third of the import was from Japan, followed by import from Italy and Germany. Welded pipe import surged 22% y-o-y to 225,353 tonnes in 2020. The top three largest sources of import were South Korea, Japan and Germany. Import from Vietnam saw a significant increase by three-digit growth rate to 225,353 tonnes in the same period. 

All in all, ASEAN countries are having benefits from China’s imports. However, most of companies have connections or direct links with Chinese companies or customer, through their parent companies which have investment in ASEAN countries (e.g. Tsingshan Steel, Alliance Steel), or some of them have strong distribution networks such as Krakatau POSCO.

Source : SEAISI