China Iron and Steel Association has asked its member steel mills to be more disciplined when engaging in steel export business, pressing them to control their export volumes and adjust their export structure, pointing out that the domestic steel industry has entered a new stage of development.
In an advisory letter distributed to members on Thursday, CISA said that China’s steel industry is being pressured by the dual requirements of conserving resources and protecting the environment. Consequently, as it enters a new phase in its evolution, the industry needs be “domestic demand-driven, resources-saving and environmentally-friendly.”
Steel mills and trading companies need to adjust their export practices, as a joint effort is needed to ensure stable domestic supply while at the same time, maintaining and improving the industry’s global competitiveness, CISA advocated.
Chinese steel mills need to take the initiative to lower total export volumes, in order to better satisfy domestic demand and reduce energy and resources consumption, CISA said, especially this year given that Beijing has already ordered that domestic steel capacity be curtailed and steel output lowered to ensure China attains the goals of carbon peak and carbon neutrality.
So far this year, the Chinese government has adjusted steel export tax rates and tax rebate policies twice, which clearly showed its policy direction regarding steel imports and exports, CISA pointed out.
The two rounds of export policy adjustments starting May 1 and August 1 respectively, included removing export tax rebates on all steel products, as Mysteel Global reported. Nevertheless, China’s finished steel exports over January-July totaled 43.05 million tonnes, still up 30.9% on year, with the growth rate even higher than 30.2% in H1.
“Steel companies should not be tempted by high international prices…Exports should not simply be for profit-making,” CISA stressed. The association asked steel mills to re-examine which products they export and the volumes of each, advising that shippers should avoid exporting common grade steel products or, if they must, to export as little as possible.
Rather, they should produce and export more high value-added products where possible, to better contribute to the manufacturing expertise of the companies themselves and the Chinese market, the association proposed.
High value-added products are a symbol of a steel company’s technology, service and brand, CISA maintained. Exporting such products and letting them compete in and be tested by the international community will help China’s steel industry to improve product quality, technologies and service, it stated.
CISA also called on its member mills to improve management of their sales channels, reduce their reliance on intermediate trading and to serve end-users directly. This will enhance the tracking of their products by destination – to avoid the occurrence where products originally sold in the domestic market eventually wind up being shipped abroad.
For steel trading companies, CISA also advises that those engaging in domestic steel trading should focus on the domestic market. It also warned that foreign trading companies handling Chinese steel must adjust the structure of their export business to comply with the government’s policies.
Written by Olivia Zhang, zhangwd@mysteel.com
This article has been published under an article exchange agreement between Mysteel Global and SteelMint.
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