China’s Steel Exports Rise as New Taxation Regime Yet to Bite

Steel exports from China, the world’s largest producer, rose to a record for a fifth month.

The country shipped 10.29 million metric tons of steel products in January, according to data released by the customs administration today. China’s outbound shipments surged 51 percent to a record 93.78 million tons last year as producers sought overseas buyers while construction slowed and the economy cooled.

“While the Chinese steel mills continue to focus on maximizing output rather than tackling the overcapacity, exports will continue to undercut the rest of the world,” Ian Roper, a commodity strategist at CLSA Ltd. in Singapore said before the data was released. “The Chinese steel prices just are so low compared to the rest of the world, and with iron ore still being under pressure, there’s room for them to still come down a bit further.”

Exports during this year are expected to decline after the government canceled export tax rebates for steel alloys that contain the chemical element boron starting as part of a drive to force the sprawling domestic industry to consolidate. Shipments of the alloyed steel, which earlier earned a rebate of as much as 13 percent, accounted for more than 30 percent of last year’s shipments, according to Roper.

Slowest Pace

China’s output grew at the slowest pace on record last year while steelmakers delayed cutting jobs and closing plants as construction demand dropped during the slowest year of economic growth since 1990. The country’s output of 822.7 million tons was more than double that of the combined next four largest producers -- Japan, the U.S., India and South Korea, according to statistics from the World Steel Association.

Iron ore imports fell 9.5 percent from record in December to 78.57 million tons last month, the customs agency said.

The country will continue to phase out overcapacity in its steel industry, which can produce 1.16 billion tons, the Ministry of Industry and Information Technology said on Feb. 5.

Domestic steel consumption shrank 3.4 percent to 738.3 million tons last year, the China Iron & Steel Association estimates. That was the first demand contraction since the 1990s, according to Sanford C. Bernstein & Co.

Futures for steel reinforcement-bar, used in construction, closed on Friday in Shanghai at 2,486 yuan ($398) a ton, falling 27 percent in the last 12 months.

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