Nation likely to remain net steel importer
(Shenzhen Daily/Agencies)
Updated: 2005-09-27 09:34

Poor margins for steel exporters have made it probable that China, the world's largest steel producer and consumer, will remain a net importer of steel products this year, a senior industry official said Sunday.

"Steel products exports this year probably won't reach 20 million tons," Wu Xichun, advisor to and former chairman of the China Iron and Steel Association, said.

"Because of the tax rebate changes and the international price levels, it isn't all that profitable to export."

He put steel products imports in 2005 at 26 million tons. China's raw steel output is projected to grow this year to 344 million tons, Wu said, a rise of over 25 percent following massive expansions this year and last.

China's rising domestic capacity has displaced some imports and undermined global steel prices, leading global steel giants like Europe's Arcelor and South Korea's POSCO to cut output and steel worker unions in the United States to seek anti-dumping protection.

Lower exports turned China into a net importer of steel products and semi-finished products in July, reversing 10 straight months as a net exporter.

China imported a net 2.2 million tons of steel products in the first seven months of 2005.

But it exported a net 4.58 million tons of semi-finished products, including steel billet, in the same period -- leaving some analysts to project the country will be a net steel exporter in 2005 if semi-finished products are included.

China imported 29.3 million tons of steel products in 2004, and exported 14.2 million tons.

In May, the Chinese Government removed tax rebates on exports of semi-finished steel products and cut the rebate for steel products to 11 percent from 13 percent.

Wu said the Central Government had not yet decided to further cut rebates on steel products exports.

The tax changes have helped keep steel in China, pressuring domestic prices and squeezing mills' margins.

The Central Government has tried to put the brakes on the steel sector with credit curbs and iron ore import restrictions, but the expanded capacity has nonetheless contributed to transport bottlenecks and higher international iron ore prices.

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