After a quiet start to the year, steel exports from China surged ahead in May, the 8.1mt being the highest monthly figure since 2016 and dramatically ahead of earlier months including February when steel leaving China totaled just 3.5 MMT.

To date Vietnam at 2.65 MMT to May is marginally ahead of South Korea (2.61 MMT) as the leading destination for Chinese exports with The Philippines (1.6 MMT) and Thailand (1.5 MMT) next in line, but the big story is the huge increase in Chinese steel shipments to areas of the Mediterranean and the Continent.

Turkey which by end May last year had only imported 0.6 MMT has already received nearly 1.2 MMT whilst Italy which imported about 1 MMT in total last year has already received 0.9 MMT steel from China; in addition, Belgium has imported 0.45 MMT, around a threefold y-o-y increase. Overall Chinese steel exports to the Atlantic increased by nearly 1 MMT in May to 2.4 MMT, again the highest monthly figure since 2015.

Some of the increase in Chinese imports to the Mediterranean and Continent are undoubtedly due to shortages created by the lack of available Ukrainian steel in recent months (last year Ukraine exported 15 MMT mostly to Europe) and even though China’s own production has dropped 30 MMT y-o-y to 434 MMT, China remains the most available alternative supplier.

This uptick in steel exports back to the Atlantic has had a positive knock-on impact on the Supras/Ultras where the highest premiums available (in mid high $30’s on time charter are on the Chinese steel backhaul routes) compared to the mid-hi $20’s on time charter available for Pacific round voyage and US Gulf to Far East business. This increase in ton-mile employment has been a positive for Owners at a time of overall falling demand, but consequently there are nearly 250 more Supras-Ultras positioned to the Atlantic at present compared to this time last year which may act as a brake on any Atlantic market Supramax upturn in second half 2022.