China steel body sees sharp drop in exports, ample iron ore supplies

• The inquiry of orders with mills fell dramatically in the April-May period, steel exports in the second quarter are not optimistic
•  Steel imports, meanwhile, are seen surging in the second quarter due to sluggish overseas demand, according to Wu.
• Wu said iron ore supply should be "loose" in the second quarter due to the easing impact of weather conditions and rising global shipments.

BEIJING: China's steel product exports will drop significantly in 2020 compared with previous years as coronavirus lockdowns have brought global economic activity to a virtual halt, the country's steel industry body said on Monday.

"The inquiry of orders with mills fell dramatically in the April-May period, steel exports in the second quarter are not optimistic," Wu Jingjing, deputy director of the China Iron and Steel Industry Association (CISA) told a webinar held by the Singapore Exchange, adding that full-year sales abroad will plunge.

Steel imports, meanwhile, are seen surging in the second quarter due to sluggish overseas demand, according to Wu.

The public health crisis has also affected the trade flow of steel and semi-finished steel products in the first four months of 2020, with China's steel imports rising 7.4% on an annual basis and exports plunging 11.7%.

Wu said he expects domestic consumption in the world's top steel producer to gradually recover in the second quarter, thanks to rising infrastructure investment and an "orderly revival" of the property market. However, demand in the manufacturing sector is expected to dive.

China's excavator output soared 49.5% year-on-year in April, data from the National Bureau of Statistics showed on Monday, pointing to higher construction activity in the near future, which could boost steel consumption.

The official also warned that steel prices are deviating from iron ore, which has been range-bound since February, while prices of rebar and hot-rolled coil products have continued to drop.

The most actively traded iron ore futures on the Dalian Commodity Exchange for September delivery jumped 7.5% on Monday to log the biggest daily gain since July 9, 2019.

Wu said iron ore supply should be "loose" in the second quarter due to the easing impact of weather conditions and rising global shipments.

"(We) hope iron ore trading centers and pricing institutions can enhance price discovery functions... to make prices more in line with market demand and supply," he said.

China bought 95.71 million tonnes of the steelmaking ingredient last month, 11.4% higher on a monthly basis. Its domestic production was at 74.38 million tonnes in April.