Chinese steel prices started the new year with a positive twist, although some Chinese folk would hardly call it positive, as gains were brought about by adverse weather conditions in the country’s Northern provinces.
Investors are expecting a slight deficit of steel goods following the Chinese government’s moves to curb steel production in regions with a hampered ecological situation.
Heavy smog has covered Northern China this weekend and will continue to make life harder for the locals until Thursday, according to weather reports. Traditionally, during such weather calamities China is curbing steel output, as well as halting cement production and construction works.
The most active May rebar contract at the Shanghai Exchange gained 0.6% on the day to 2,927 yuan or about $420.87 per ton. Iron ore price at the Dalian Commodity Exchange rose 0.2% to 555,5 yuan per ton.
While China is endorsing steel production cuts to ease the blows dealt to its ecology combined with decreased demand from the US following the introduction of higher tariffs on Chinese-origin steel, Vietnam is reaping the benefits, as lower Chinese imports must be substituted from elsewhere.
According to the American Iron and Steel Institute (AISI), US steel import from Vietnam rose 419.6% in January-November 2016 over the 2015 figure to 903,000 tons. Vietnam outpaced China, Taiwan and Germany, and is now holding third place among top steel exporters to the US following South Korea and Turkey.
However, overall imports of steel and steel products to the US fell by 16.5% and 17.3% year-over-year respectively. The trend is likely to continue in 2017, considering Donald Trump’s domestic economic expansion policy. US steel output is already forecast to expand 4.4% in 2017.