Steel Sector Update - China’s Steel Exports Rise As Domestic Demand Weakens: Motilal Oswal
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Motilal Oswal Report
China’s apparent monthly steel consumption fell below 1% YoY last month for the first time since March 2020.
Lower consumption in China also pushed mills to export more, with June exports rising 23% month-on-month.
Despite higher exports, June crude steel production growth at 2.5% YoY was the lowest in the past year.
Given the Chinese government’s objectives to control steel production and emissions as well as cool domestic steel prices, we believe higher exports raise the risk of the imposition of export tax.
Export tax, if imposed, would raise regional steel prices due to tightened supply and be a positive for the sector outlook.
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