Chinese stainless mills brace for US trade blow
US president Donald Trump’s recommendation last Wednesday that
tariffs on an additional $200 billion worth of Chinese imports be lifted to
25%, up from the 10% he announced in June, has some Chinese stainless market
insiders worried. They fear the move
will further dent domestic demand for stainless goods which is already weak for
seasonal reasons.
Most Chinese exports of finished stainless steel items were
already on the inaugural list of targeted goods that Washington released on
April 3, the first $50 billion worth slapped with duties of 25%. However,
Trump’s new list of China-origin goods – those whose US imports are worth $200
billion – include many kinds of stainless end products including stainless
flanges, fittings, doors, windows, sinks and wash basins, Mysteel notes.
“The move (to heavily tax more Chinese goods) could result
in our downstream users such as makers of sinks and wash basins losing buyers
abroad. We’re worried that subsequently, they could reduce the volume of
stainless sheets they buy from us or even stop buying completely,” said an
official from Gansu Jiu Steel Group Hongxing Iron and Steel Co, a stainless
producer based in Northwest China’s Gansu province.
Chinese sinks and wash basins made of high-performance
stainless like chromium-nickel 300-series are popular in the global market,
Mysteel understands.
Officials from a stainless maker headquartered in East
China’s Zhejiang province expressed similar concerns. “Unlike the market for
ordinary carbon steel, China’s stainless market is very small (and) any threats
to demand will inevitably hurt our business,” one admitted.
As of August 3, stainless product inventories at warehouses
in Wuxi, one of the two major stainless distribution centres in East China’s
Jiangsu province, totalled 214,180 tonnes, up 8.5% from June and 19% on year.
June-August is traditionally a weak season for China’s
stainless market and the escalated trade friction between China and US is
adding to the market’s woes, according to a Wuxi-based market watcher.
“On the one hand, finished stainless items, chiefly coils
and sheets, bound for the US are already returning to the domestic market but downstream
users draw down their inventories very slowly so their buying interest is
diminished. On the other hand, the enthusiasm of downstream users to buy the
feeds will be further dampened as they fear that now, they might also be losing
an overseas market for their stainless goods,” he said.
In fact, some mills have already adjusted their production
schedules due to the weakening demand, especially for 300-series stainless
products, according to the official from Gansu Jiu Steel.
Latest data released by the Stainless Steel Council of
China Special Steel Enterprises Association (CSSC) on July 30 showed that
Chinese output of 300-series stainless rose to 6.1 million tonnes over
January-June, albeit up by just 1.5% on year. Moreover, the share of total stainless
output held by 300 series dropped by 5.2 percentage points from the 50% the
grade enjoyed in H1 2017.
Written by Olivia Zhang, zhangwd@mysteel.com and Thea Feng,
fengyx@mysteel.com
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