Impacts of financial crisis on stainless steel trade

Affected by the recent international financial crisis, the international economy has sunk into the mud. The stainless steel industry became relatively weak and directly affected. The government and steel mills made joint efforts to rescue the market. However, they merely managed to temporarily halt the slump on the market. Meanwhile, the appreciation and depreciation of renminbi (RMB), the Chinese currency, would inevitably influence import and export of stainless steel, and production and fixing prices in stainless steel mills. The situation is not so optimistic on the whole.

The overall situation is largely shown in the following two aspects:

I.       As customs statistics indicated, China imported 10,575.937 tons stainless steel in October, up 2% over the 10368.893 tons in August. China exported 6,775.858 tons stainless section steel in October, down 18.51% from 8314.928 tons in September.

The Chinese government promulgated a new policy on export tax rebates on October 13. Articles on stainless steel varieties were shown as follows:

Readjusted export tariff (took effect on December 1, 2008) - stainless steel varieties

 

Export taxes (from December 1, 2008 to December 31, 2009) – Steel products

 

The customs tariff adjustment largely focused on special steel and plates. Adjustment of shape steel was generally directed towards to regular carbon steel, not relating to stainless section steel. As regards adjusting stainless steel, attention was put on some specifications of steel coils and steel welded pipes. Policies were not raised on elevating export tax rebates of widely recognized 300 series black steel, 200 series stainless steel and stainless steel products.

II.      Since 2008, RMB exchange rates were raised from 7.2996 yuan to one U.S. dollar on January 2 straightly to 6.8128 yuan on July 16. By December 2, the appreciation and depreciation around 6.8527 yuan to one U.S. dollar would surely affect the import and export of stainless steel.

Theoretically, the impact of RMB appreciation on the overall stainless steel industry will be decided by benefits and losses of stainless steel importers and exporters, and the contribution of the two parties on the growth of the stainless steel industry. But in actual circumstances, RMB appreciation affects Chinese stainless steel exporters more heavily than importers.

According to industrial experts, the Chinese stainless steel market would recover in the second quarter of 2009. At that time, the market will raise higher demands resulting in greater transactions. This might be good news to the mass of stainless steel exporters struggling in the chilly winter of business operation.