ACCOUNT PROFILE

China’s Aug steel exports fall MoM after rebate removal

Posted on 09 September 2021

Chinese finished steel exports fell for the second successive month in August, with the volume down by another 10.9% from July to 5.05 million tonnes, or the second lowest this year, according to the latest data released by China’s General Administration of Customs (GACC) on September 7. Market watchers blamed the lifting of export takes rebates last month for the dismal performance.

 

Effective August 1, China cancelled the export tax rebates on another 23 steel items following the rebate removal on 146 steel products from May 1, with the result that rebates on all steel products have now been removed, as reported. The central government’s hope was that more domestically produced steel, especially lower-end ones, would remain in the country and the continued decline in steel exports shows that the policies have been having an effect, market sources agreed.

The on-month fall matched the feedback of some steel foreign market players.

“Our August export volumes nearly halved those of previous months,” a steel trader based in East China stated, noting these were mainly galvanized steel products.

Another trader said that her firm’s export volumes declined obviously from July, “as we tried to ship large quantities of products out at the end of July, before the latest take rebates cancellation took effect.”

However, when compared with August last year, last month’s export volume still increased by a substantial 37.4% on year, surprising a few industry participants.

One industry source based in South China commented that “initially, I think the export quantities should have dropped (on year) due to the uncertainties about export taxes and the weak demand abroad.” 

The on-year growth was mainly due to the low basis for August 2020 at only 3.68 million tonnes – a new low since January 2013 – because by then, Chinese domestic steel prices were strengthening rapidly in line with the demand revival following the COVID-19 outbreak, while internationally, both steel prices and demand were poor, making exporting extremely difficult, market sources agreed.

Hence, over January-August this year, Chinese steel exports increased 31.6% on year to 48.1 million tonnes, with the growth rate expanding from 30.9% over January-July.

As for steel imports, China’s finished steel imports in August reached 1.06 million tonnes, almost flat on month. This took total imports over January-August to 9.46 million tonnes, down by a larger 22.4% on year from the 15.6% on-year decline over January-July, according to GACC’s latest statistics.

Source : Mysteel Global