China's steel exports rise for record fifth month

A foundry of Hebei Iron and Steel Group Co Ltd in Zhangjiakou, Hebei province. China shipped 10.29 million metric tons of steel products in January, a 52 percent rise from the same month of last year. [Photo provided to China Daily]

Steel exports from China, the world's largest producer, rose to a record for a fifth month as new tax rules for some shipments failed to slow sales.

The country shipped 10.29 million metric tons of steel products in January, a 52 percent rise from the same month of the previous year, according to data released by the customs administration in Beijing.

China's outbound shipments surged 51 percent to a record 93.78 million tons in 2014 as producers sought overseas buyers while domestic construction slowed and the economy cooled.

The surging exports underscored the country's record trade surplus last month caused by weakening domestic demand and plummeting commodity prices. Total imports fell by the most in five years amid a property downturn and a stall in manufacturing.

Steel shipments during this year are forecast to fall after the government canceled export-tax rebates for alloys that contain the chemical element boron as part of a drive to force the industry to consolidate.

"We expect exports to decline in February as the impact of the tax change filters through and as domestic crude steel production has fallen sharply in response to steel margins turning negative," Ivan Szpakowski, a Hong Kong-based commodity strategist at Citigroup Inc, wrote in a report on Monday. "Anecdotal reports are that exports were slower in late January and early February."

January shipments were stronger than expected because many supply contracts for the month were signed before the change and as mills and traders liquidated inventories, according to Szpakowski. February exports should decline while mills adjust production to export alternate products, he said.

Boron-alloyed steel accounted for more than 30 percent of last year's shipments, according to Ian Roper, a commodity strategist at CLSA Ltd in Singapore.