(Yicai Global) April 25 -- Infrastructure construction along the One Belt, One Road route has accelerated this year, paving the way for China's steel exporters to see a big boost in business.
It comes as good news after continuous declines in exports over the past several months. The fall for March is predicted to be more than 20 percent, according to data published by export research group Shanghai Ganglian E-Commerce Holdings Co.
Compared with China, the scope for urbanization in Asian and African countries along the belt and road route is estimated to be 10 percent and 20 percent respectively. "There's plenty of room for infrastructure and production cooperation in these countries," said Wang Guoqing, head of Lange Steel Information Research Center. "Demand there is huge. China's experience and capacity, accumulated through its own urbanization process, can be exported to these countries."
Last year, China won CNY162 billion (USD23.5 billion) worth of construction contracts in countries along the belt and road, mainly covering electric power, housing, transport, petrochemical engineering facilities and communication, said Chen Kexin, an analyst at the research center. This year, the projects will directly and indirectly boost China's steel exports. The total volume is expected to be high, maybe even 100 million tons, he added.
Chinese steel products are sold to some 60 countries along the route of the One Belt, One Road initiative. Last year, exports to these countries continued to grow despite a fall in total volume. Exports to the belt and road countries totaled 63.9 million tons, up 2.7 percent from the year before, in contrast to a 3.5 percent slide in total exports. More specifically, exports increased in 41 countries, with Vietnam topping the list of fastest-growing markets. Some 23 countries, led by India, reported declines in steel imports from China.
Recently tightened anti-dumping measures have seen America's share of China's steel exports fall to between 2.5 and 3 percent, said Gladdy Chu, a steel analyst at British research agency Metal Bulletin. Chinese steel traders are now tapping into South East Asia, the Middle East and Africa, all covered by the belt and road strategy. Exports to countries in these regions has increased by the year, making up 59 percent of total exports last year, up 3.6 percentage points from 2015.
Of all nations on the route, Vietnam stood out, becoming the second largest destination for Chinese steel. As a developing economy, it has huge demand for steel to support development of infrastructure and urbanization projects, Wang Guoqing said.
Last year, Vietnam imported a total of 18.4 million tons of steel, up 18.4 percent on the year, according to country's customs data. The central government introduced a steel industry plan, which indicated that the nation's steel shortage currently stands at about 15 million tons, and will reach 20 million tons by 2025.
India fell two places to number seven on the list of China's largest steel importers, buying just 3.3 million tons last year, down more than 30 percent (1.4 million tons) from 2015.
Its steel industry has developed rapidly in recent years, said Wang, and the government increased trade remedy investigations against Chinese products in a bit to protect the domestic industry. India carried out six inquiries into China's steel imports last year alone, more than any other country in the world.