According to the latest confirmed message from China's Ministry of Commerce, another strict measure aimed at curbing steel product exports is expected to be enforced from June at the earliest. An unnamed government official declared that the Chinese government has made up its mind to impose a 5-10 percent export tax on partial steel products in order to limit the rapid increase of China's steel exports. The final tax rate is still under discussion but is likely to be close to 10 percent due to the seriousness of the current steel export situation.
In April 2007, China's finished steel exports reached a new historical high, totaling 7.16 million metric tons with a year on year growth rate of 166 percent. Meanwhile semi-finished steel exports in April came to 870,000 metric tons - the highest monthly export figure so far in 2007. During the January-April period, total exports of finished steel reached 21.3 million metric tons, up by 12.1 million metric tons compared to the same period in 2006 with a yearly growth rate of 133 percent. As to semi-finished steel exports in January-April, a figure of 2.66 million metric tons of steel products was recorded, up 92 percent year on year.
The current period is a remarkable one for China's steel industry. The Chinese government is continuing to put forward measures to control steel exports. Although the steel export license system was just announced around 20 days ago and has still not taken effect, a new and sterner measure is now on the horizon, adding to the shadow which is being cast over the market.
Currently, the domestic steel market is still bullish. The prices of various steel products have increased by varying degrees. Benefiting from the strong domestic steel demand, HR, CR, plate, section steel and rebars, but especially HR and construction steel, have seen their sales prices increase from their lowest levels by over 10 percent in 2007.
The steel price is widely considered as an important indicator for China's macro-economy. Many people including some economic experts and researchers treat the local steel market situation as material for important research and forecast the future national economy partly based on the analysis of steel price changes.
Due to the 2008 Beijing Olympic Games and in the context of China's Eleventh Five Year Plan, the government is investing greatly in the construction of infrastructure, thus creating more opportunities for the steel mills. This is the key reason behind the price hikes for steel products in the domestic market.
It is a major source of worry in the market that due to China's stricter measures to curb steel exports, the local steel market situation may soon change. Although no one wants to see a repeat in 2007 of the market collapse of 2005, the possibility of this happening still remains.