China is likely to bring down the export of steel products to 27% in 2008 by levying additional export duties.
According to the Vice President of the China Iron and Steel Association, Luo Bingsheng, China is expected to export 27% less steel this year as part of the government’s efforts to reduce its export. The crude steel export by the country will slump from 73.07 Million Tons in 2006 to 52.5 Million Tons this year, as reported by Xinhua.
The officials at the China steel association also disclosed that China recorded crude steel output of around 489.2 Million Tons last year, 15.7% higher but 2.67% points less than rise in 2006. The Chinese steel industry consumes 15% of the total energy generated and release 14% of the total pollutants. The net export of crude steel from China increased 58% and reached to 54.9 Million Tons in 2007.
The Chinese government levied export tariffs heavily on over 80 steel products, including sheet and plate, steel wire, and also increased export tariffs on various commodities, for instance, steel billets, pig iron and ingots. These commodities are highly polluting and consume too much energy. The government has either scrapped or substantially reduced the range of export rebates with an intention to check exports and curb over-production.
There are several reasons that led to the imposition of export tariffs on the steel, such as macro control measures taken by the government on steel exports, huge differences between domestic and international prices, fast changing market demand, and the effect of protectionist actions from the importing regions and countries. Moreover, the demand for Chinese steel has gone down in the US and Europe due to anti-dumping issues.
Moreover, the Chinese steel association revealed that the new macro regulations would be implemented this year. It also revealed that if export of iron and steel increase further despite these regulations, then the government might take some strict actions.
According to a Research Analyst at RNCOS, “Chinese government’s recent imposition of export duties on steel products has badly affected its own industry as well as other countries. Loss in confidence and change in behavior of other countries towards China has forced the government to curtail the export. Undoubtedly, it is not a good indication for the domestic steel players as it bounds them to confine their business activities within the realms of the country.”
Related Market Research Reports:
China Steel Industry Forecast till 2012
Opportunities in Indian Steel Industry
US Steel Industry Outlook (2007)
