Steel exports to rise through 2007

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China will continue to see a steady rise in steel production exports in spite of the governments best efforts to curb exports by canceling export tax rebates on the majority of steel products an industry official at the 2007 China Steel Import & Export Seminar said yesterday in Shanghai.

“The tax rebate cut, which has been debated for a long time, won’t have a substantial impact on the market. Many steel producers increased their exports substantially even before the tax rebate policy was introduced,” said Qi Xiangdong, deputy secretary-general of the China Iron and Steel Association (CISA). “Besides, the international demand for steel is increasing rapidly.” 

China’s steel product exports increased to 43.01 million tons in 2006, up 110 percent from 2005. The CISA predicts steel product exports will be controlled to within 10 percent of the total output this year. Total production of steel products is expected to reach 500 million tons this year.

But Qi said the development of China’s iron and steel industry will be slower this year mainly because of the stricter macro control leading to a shrinkage in fixed-assets investment in the industry. By the end of 2007, blast furnaces below 200 cubic meters and converters and electric furnaces below 20 tons will not be allowed, according to a National Development and Reform Commission policy.

“It’s impossible to maintain the usual 20-percent growth rate as steel companies’ production capacity will be weakened.” Qi and other steel experts said Chinese steel prices will remain steady and lower than the price on the international market this year. Steel companies’ profits are expected to rise because of the improvement in product structure and reduction of operation costs.