China's indirect steel exports are expected to remain resilient

Mechanical and electrical products are mostly steel-consuming products, and their exports roughly reflect China's indirect exports of steel. After the epidemic, thanks to the advantages of China's manufacturing industry chain, the export of mechanical and electrical products has grown rapidly.

At present, the downward pressure on the world economy is emerging, and the overseas interest rate hikes are deepening, the total demand may gradually weaken, and China's exports may decline marginally. However, overseas inflation is high. In June, the year-on-year increase in the US CPI reached a new high. The reason for this round of inflation is more on the supply side, and it is difficult to alleviate in the short term. Recently, there have been frequent reports that the United States is considering lowering some tariffs on Chinese goods due to inflationary pressure.

In the context of overseas inflation, the prices of Chinese products are relatively stable, and the price factor may support exports to maintain strong resilience, while the exports of mechanical and electrical products, which account for more than half of exports, may maintain a certain growth. Among them, automobiles and construction machinery benefit from the improvement of product power. It is expected to maintain rapid growth. In the second half of the year, under the circumstance that the direct export of steel may continue to decline, the indirect export of steel is expected to maintain a certain degree of resilience in the marginal decline of growth rate.