Chinese authorities are discussing a potential policy that would further slow the rising amount of steel product exports and curb the country??s huge trade surplus, but so far no consensus has been reached, a source familiar with the situation told Interfax yesterday.
The root of the problem is the difficulty in curbing the rapid growth of steel product exports, which is one of the main reasons for the country??s huge trade surplus, while still maintaining profitability in the steel industry.
The China Iron and Steel Association (CISA) convened an internal meeting regarding China??s steel product exports yesterday morning, at which the National Development and Reform Commission (NDRC) proposed to increase the export tax of steel billet to 25% from the current 15%, raise the export tax of hot-rolled sheet and long products to 15% and cancel export tax rebates for high value-added steel products, said a source close to the situation, who wished to remain anonymous due to the sensitivity of the issue.
In the meeting, officials from both the Ministry of Finance and the CISA spoke in opposition to the proposal, arguing that it would be too harsh on domestic steel mills, according to the source.
"They will continue to discuss a feasible policy in the future, as the NDRC insists that steel product exports should be lowered further in order to help maintain a trade balance," the source said.
China recorded a trade surplus of $24.97 billion in August, the second highest monthly figure this year after June, according to statistics released by the General Administration of Customs.
Chen Kexin, a senior economist from the Ministry of Commerce??s Distribution Productivity Promotion Center, told Interfax last week that the Chinese government would continue to pay close attention to steel product exports for the remaining three months of the year, and would release further restrictive policies if the current ones are deemed insufficient.
China exported 5.38 million tonnes of steel products in August, down 9.4% from July, and exported a total of 45.08 million tonnes of steel products in the first eight months of the year, a surge of 83.8% from the same period last year.
An anonymous analyst with Umetal Co. Ltd., a Beijing-based steel industry consultancy, remarked that further restrictive policies would exacerbate the oversupply problem of steel products in the domestic market, and bring down domestic prices.
"China??s steel production this year will be no doubt beyond the CISA??s previous prediction of around 490 million tonnes. The current balance [between supply and demand] in the domestic steel market is fragile and is mainly supported by the huge amount of steel product exports," he added.