Export tax rebate cancellation: Why are steel exports still so high this year?

The latest statistics from the General Administration of Customs show that in August 2021, China exported 5.053 million tons of steel products, an increase of 37.3% year-on-year. Although a month-on-month decrease of 10.9%, the cumulative export of steel products from January to August was 48.104 million tons, still achieving a year-on-year increase of 31.6. %.

At the same time, imports showed the opposite situation: in August 20121, China imported 1.063 million tons of steel, a decrease of 52.5% year-on-year, and the cumulative imports of steel from January to August were 9.46 million tons, a year-on-year decrease of 22.4%.

Data show that from January to August 2021, steel exports are bounded in April, showing a trend of rising first and then falling. The export volume in April was 7.974 million tons, and thereafter it decreased month by month.

Based on the consideration of a series of factors such as energy saving, carbon reduction and capacity reduction, the State Council Tariff Commission will cancel export tax rebates for some steel products and adjust tariffs on some steel products from May 1, 2021. The Tariff Commission of the State Council stated that the aforementioned adjustment measures are conducive to reducing import costs, expanding imports of steel resources, supporting domestic reduction in crude steel production, and guiding the steel industry to reduce total energy consumption.

But despite this, the export data is still impressive. On October 11, Wang Guoqing, director of the Lange Steel Research Center, analyzed to the Economic Observation Network: “The reason for the significant increase in my country’s steel exports is mainly that the recovery of global steel demand is faster than the recovery of production, which makes the international market tighter prices. Yang, stimulating overseas demand for Chinese steel.”

Wang Guoqing judged that as the overseas manufacturing boom peaked and steel demand declined, while overseas steel production continued to grow, the international market prices had dropped significantly, while the export quotations of my country’s steel products declined slightly, and the export price advantage continued to rise. Weak, superimposed on the adjustment of my country’s steel export tariffs and the cancellation of tax rebates, the steel export order index has been operating in the contraction range for 5 months, and it is expected that steel exports will continue to fall in the later period.

According to the data of the Orient Securities Derivatives Research Institute, China’s steel exports are dominated by plates, which will account for 67% of exports in 2020. The main types of plate exports include hot coil, cold rolled, galvanized, and color coating.

According to data from Lange Steel Network, due to the impact of the epidemic this year, some overseas steel markets have shown huge growth rates. Take the U.S. market as an example. In early January this year, the price of hot-rolled coils from steel mills in the Midwestern United States was US$1,136/ton. At that time, the export price of similar products in the Chinese market was US$668/ton. By mid-May of this year, the US Midwest The price of hot-rolled coils from steel mills was US$1,620/ton. At that time, the export price of similar products in the Chinese market was US$1,041/ton (this price is China’s highest point in the year). The price of rolled coils was US$2,150/ton. At that time, the export price of similar products in the Chinese market was US$939/ton.

However, the United States is not China’s main export destination. According to public information, the main export destinations of Chinese steel in recent years have been Southeast Asia and Africa. Data show that at the beginning of this year, the import price of steel in Southeast Asia was still higher than the export price of Chinese steel, but by late July, the import price of steel in Southeast Asia was already lower than the export price of Chinese steel.