Chinese steel mills should be more competitive in the domestic market so that they can help cut imports of steel, an industry expert said.

Wu Xichun, former chairman of the China Iron and Steel Association, said that they should enhance the quality of the steel they produce and improve their service in order to be competitive and efficient players in the domestic market, and then help trim imports.

"Also, we should keep domestic prices lower than those in the international market to avoid a return of excess imports," Wu told an industry conference over the weekend.

China exported a net 4.3 million tons of steel in the first four months, he said.

For the first half of last year, China was a net steel exporter with a surplus of 2.3 million tons. But in the second half it turned into a net importer, according to customs figures.

The net imports of 2.18 million tons in the second half were due partly to dumping from some countries including Russia and Ukraine, Wu said. And the dumping had hurt the domestic market, which was already saddled by a glut.

Steel prices in China tumbled last year from April as a result of nationwide oversupply, according to a national steel price index. The index fell 30 percent from April to end of last year. They started to rebound this year with strong fixed-asset investments, fewer stocks and a lower production growth rate.

"But exporters should also be prepared for an appreciation in the yuan and the government's possible move to further reduce tax rebates on steel exports," Wu said.

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