Bloomberg - Steel exports by China, which produces half the world’s supply, increased in May after a surge in domestic prices boosted output, defying calls from competitors for the nation to rein in shipments and curb excess capacity.

The country shipped 9.42 million metric tons overseas, 3.7 percent more than April and 2.3 percent higher than a year earlier, according to customs data on Wednesday. Exports expanded 6.4 percent to a record 46.3 million tons in the first five months of the year. Sales soared after output advanced to a daily all-time high in April in response to a jump of as much as 56 percent in prices.

“Chinese exports will stay elevated because of higher production and also thanks to expanding demand for building materials in places such as Southeast Asia and Africa,” Wei Yingsong, an analyst at Mysteel Research, said by phone from Shanghai after the data were released. 

A credit-fueled property boom and government stimulus lifted demand in China earlier this year, sparking a speculative frenzy that drove up steel rebar futures and boosted mills’ profitability to the highest since 2009. A government clampdown on speculation cooled the market in May, prompting the biggest loss since trading in rebar futures started in 2009.

The record exports have prompted protests from countries whose mills are suffering from the global glut. Japan’s Prime Minister Shinzo Abe said in May that China wasn’t doing enough to tackle oversupply and that government support was distorting markets. U.S. Treasury Secretary Jacob J. Lew said this week that China hasn’t yet implemented policies to deal with excess capacity.

Shipments are running at a higher level than last year when they jumped 20 percent to 112 million tons, more than production in Japan, the second-biggest supplier. That’s spurred protests from Europe to the U.S. and hikes in import tariffs, as well as forcing Tata Steel Ltd. to put its U.K. operations up for sale.

While China has pledged to cut as much as 150 million tons of capacity, Japan says the country needs to do more, estimating there’s an excess of 400 million tons. Li Xinchuang, deputy secretary-general of the China Iron & Steel Association, says the country won’t waver in its capacity cuts, but he also said in April he sees exports staying high for years as local demand shrinks.

China also stepped up iron ore imports in May to feed the steel boom. Purchases by the world’s biggest buyer rose to 86.75 million tons, the highest since December, while inbound shipments expanded 9 percent in the first five months to 412 million tons, customs data show. Higher steel production “supported buying activities for iron ore,” Di Wang, an analyst at CRU Group in Beijing, said by e-mail.

Courtesy : Bloomberg