Events:

In January 2019, China exported 6.188,000 tons of steel, 632,000 tons more than the previous month, an increase of 33.3 percent year-on-year.China imported 1.179 million tons of steel in January, 173,000 tons more than last month, down 1.0 percent year-on-year.Net steel output was 5,009,000 tons, 459,000 tons more than last month and 1,549,000 tons more than last year.

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The main export region of China is southeast Asia, and the main export product is hot-rolled sheet metal. Therefore, from the perspective of historical data, the hot-rolled price difference between China and southeast Asia has a high fitting degree with the data of net export.Generally, export orders should be received 1-1.5 months in advance, so the price difference one month in advance will have a significant impact on the monthly net export data.

According to historical data, domestic steel production capacity has been expanding before 2015. Therefore, during the wide fluctuation of price difference, net exports keep rising, and the trend of proposed merger is not particularly obvious.Domestic supply growth also began to slow down in 2015, and net exports basically peaked.

Since 2016, the correlation between southeast Asia and domestic hot-rolled spreads and net export data has increased significantly, and most inflection points are basically the same.But since last August, the trend has diverged.The reasons are as follows: 1) the limited production in tangshan leads to a decrease in the supply of class talents;2) strong domestic demand;3) the domestic profit is higher, and the marginal profit increment of export is no longer obvious.

From December, the domestic demand enters the seasonal low season, the domestic hot rolling profit also drops from the early period of 500-600 yuan to less than 100 yuan, the marginal profit attraction of export increases greatly.Therefore, we see a significant rebound in exports in January, but the price difference is still significantly lower compared with the previous period.At present, the price difference at home and abroad is still in a high position, domestic hot rolling profit is still low, in this case, we believe that exports will become a new bright spot in the near future.