China has raised the export tariff from 15% to 25% on steel billets, non-alloy products, and pig iron to control trade surplus. The action is taken after intense stress from the US to bring down its steel export.
As per the China Iron and Steel Association, the government increased export tariffs from 15% to 25% on Chinese pig iron, non-alloy steel ingots, and steel billets, on January 1, 2008. This initiative is taken to control trade surplus, decrease energy use and to cut air pollution caused by the industry. Furthermore, the Chinese government has enhanced the export duties from 10% to 15% on steel products, welded tubulars and strip, as reported by Metal Producing.
However, the trade association has explained that the change in the policy is to decrease export of iron and steel by 20 Million Metric Tons in 2008. The export tariffs might go further up if the exports continue to rise.
The US has been pressurizing China to cut down its export of steel pipes and it is also ready to enhance tariffs on China’s steel pipe import at the request of US steel makers.
EU is also forcing China to reduce its steel export. EU has started an inquiry to check whether Chinese steel giants, including Wuhan Iron & Steel and Baoshan Iron & Steel, are selling rolled steel at lower cost in EU (this is called as dumping). The enquiry would cover only €1.2 Billion, or $1.7 Billion import of hot-dipped metal-coated steel.
On the other side, China is taking every possible step to reduce the export of steel and other products to the US. The first step taken in this regard was in 2006 when China increased 10% on export tariffs of semi-finished steel products like billets and slabs.
As exports aren’t showing any signs of fall, China has also reduced rebate on export duty on various products, raising export taxes in order to reduce the export. It took strong measures like licensing of steel and exports between April 2007 and June 2007. And since the restrictions have been put in place, export has started declining.
As per a Research Analyst at RNCOS, “The new trade policies will ruin the expansion plans of steel exporters of China. Moreover, it will make Chinese products less competitive in the global market. It will increase the prices of steel in the markets of developed countries. Domestic players will gain the most from increase in export prices as prices of steel and other raw materials are decided on the basis of imported steel.”
Related Market Research Reports:
China Steel Industry Forecast till 2012
Opportunities in Indian Steel Industry
US Steel Industry Outlook (2007)
