In 2006,
China's steel exports increased sharply and draw the attention of the world. In the first 5 months,
China exported approximately 12.67 million tons of steel, up 35.1 percent year on year.
Due to the sliding down of local market prices from the middle of June, more steelmakers and traders reinforced exports further. However, with
China's export increase, the external circumstances are becoming worse. More import countries have been taking measures to restrict steel imports from
China. The next half year's export situation is not optimistic for
China's steel exporters who should make more analyses and figure out the next steps of their plans.
Australia,
Indonesia, and
Canada are among the main countries that have launched antidumping investigations of Chinese steel, and some of them started to impose antidumping taxes on steel products exported from
China. Recently in July,
Indonesia launched another antidumping investigation. This investigation is aiming at
China's hot rolled coil products and it was requested by Indonesian Krakatau Steel Co.
Thailand is also proceeding against some Chinese steel products.
Other antidumping investigations aiming at Chinese steel products may also appear in South
Korea,
Japan and the USA soon. Recently, both South
Korea and
Japan have sent representatives to
China, in order to request control on steel exports, so as not to affect their local markets. On July 13, the USA also asked
China to control the steel exports, and pointed out that it would take new trade protection measures against
China, unless
China's export growth is curbed. South
Korea and USA are both
China's major target markets. Approximately 30-40 percent of
China's steel exports are shipped to these two countries. Losing these markets because of antidumping or other trade protection measures would probably mean the fatal stroke on
China's steel export.
To avoid the external circumstances from getting worse, Chinese government is planning to put forward some measures soon. These measures are:
1. To reduce export rebates of steel products
Central government of
China was hoping to reduce the export rebate rate from 11 percent to 5 percent. But it faced a great resistance. There are many enterprises in
China that survive thanks to state's export rebates. Because of the fierce competition on international markets, they have to sell their products with little profits or even no profits at all. Their income is only the export rebates. Therefore, they are strongly opposed to a sharp export rebate reduction. Accordingly, the adjustment rate has been changed to 8 percent, which is expected to be officially announced soon.
2. To encourage Chinese exporters to developing new markets in other countries
This measure will ease the pressures on current main markets such as the USA.
3. To improve domestic steel structure and quality, and increase the export of high value-added steel products
Currently,
China's steel exports are mainly concentrated on low-end products such as
slab,
billet, hot rolled coil, and reinforcing bar. Only a few mills such as
Baosteel and Bengang export high-end products.
However, the practice of these measures may not be enough. Most of the steel exports consist of low-end products with low prices; therefore 3 percentage points reduction of export rebate will not support a price increase. It will just show Chinese government's aim to reduce the export tax rebates further. The other two measures will also have no obvious support regarding the reduction of outside pressures, because their application needs a long time, without any instant effects. Under such serious external conditions, the future of
China's steel export is gloomy and local market will be badly influenced from the increasing supply.