Sluggish Export of Steel to Ease Pressures of Tariff Adjustment in China

Comprehensive program of energy saving and emission reduction during 12th Five Year Plan set a target of import and export tariff adjustment to curb export of high energy consumption and emission products.

Insiders said that pressures of tariff adjustment are not heavy in short term due to sluggish export of steel industry in H1 of the year and previous export tariff adjustments on low added-value steel products.

Actually, export duty adjustments are mainly about two factors, one is tariff adjustment and the other is adjustment on export tax rebate. Insiders generally believed the space for export duty adjustment is very limited.

There have been several adjustments on steel export duty in recent years, with most low added-value products have been cancelled export tax rebate, longs even being imposed export duty. Currently, the export taxes on steel products are as follows.
Current export tax
Before global financial crisis, HRC, medium plate etc were imposed export tax of 5%. After global financial crisis, China cancelled export tax for part of steel products to stimulate economic recovery with some even being resumed export tax rebate. While in 2010, China started to tighten preferential measures of tax and abrogating export tax rebate on part of plates. It is estimated that China may impose export tax again to curb low added value steel products with possibility of tax level back to that before financial crisis.

Earlier in April and May of the year, there were rumors on the market to adjust export tax on part of steel products with adjustments on some special alloy steel, but without official confirmation. Since the growth in steel export is limited, it is unlikely to impose export tax, but likely to adjust export tax rebate on part of products. Some analysts estimated that CRC, HDG and boron added steel which still enjoy export tax rebate may witness adjustments.

Mr Xu Xiangchun senior analyst of Mysteel said the aim of tax adjustment on steel products is to curb export. After that, global demand may be weaker, enlarging pressures on domestic market in short term. While domestic steel mills will have to cut down output due to weaker demand, finally to achieve the target of controlling over-rapid growth in high consumption industries.

In addition to previous export tax adjustments on steel products, the export situation in H1 of the year was not optimistic to some degree lowering the possibility of issuance of export tax adjustment policy.

Customs data showed the accumulative export volume of finished steel during Jan to June was 24.33 million tonnes only up by 3.2%YoY with the average export price of USD 1,081 per tonne in June moving up for consecutive 3 months up by 3.05%MoM but falling by 28.8YoY.