September steel exports fell more than 20% year-on-year

Although China's steel exports increased by 2.4% in the first nine months of the previous year, China's steel exports in September fell sharply by 21.78%.
Trade friction against steel products is an important reason for the decline in steel exports. Since China’s steel exports exceeded 100 million tons last year, China’s steel exports have become “publicized”. In the first eight months, China’s steel trade suffered as much as 35 trade frictions. Since then, the amount involved has reached 5.886 billion US dollars.
Analysts believe that China's steel exports have touched a 20% invisible "ceiling": China's steel exports accounted for 24% of the world's export market in 2015, and China's export market share and steel's relatively dispersed industrial distribution contradicted, thus encountering A strong boycott of other countries under the pretext of dumping, subsidies, environmental protection, and labor.
In the future, China's steel exports will struggle to find a balance between China's steel superiority and trade friction resistance.

September steel exports fell sharply
On October 13, the General Administration of Customs data showed that from January to September, China's accumulated steel exports totaled 85.12 million tons, up 2.4% year-on-year; but in September, China exported 8.8 million tons of steel, down 210,000 tons from the previous month, a sharp drop of 21.78% year-on-year. .
This is certainly related to the rise in domestic steel prices and the willingness of companies to place their stocks in the domestic market. However, in the view of Xu Xiangchun, director of information for “My Steel Network”, steel prices are a short-term factor. In the long run, after exports exceed 100 million tons. China's steel has become the target of public criticism, facing enormous pressure on trade protection and limited export growth.
His forecast data for 21st Century Business Herald reporters show that the monthly steel exports will remain at 8 million to 10 million tons.
Xu Xiangchun said that in 2015, China exported 8.54 million tons of steel and 2.16 million tons of steel to the EU and the US respectively, accounting for 22.7% and 5.9% of its imports, accounting for 5.5% and 1.9% of its demand. Exports accounted for only 14.6% of steel production, much lower than Japan's and South Korea's 38.8% and 44.8%, and also lower than the world average of 28.6%. "On the data point of view, the export of Chinese steel is not enough to cause an impact on the European and American markets. The dumping is difficult to establish."
However, the Chinese steel industry has become a target of public criticism.
According to data from the Ministry of Commerce, in the first eight months of trade friction, steel products ranked first, with a total of 35 cases involving a total amount of 5.886 billion US dollars, accounting for about half of the total number and amount of trade remedy cases in the same period of this year. The number and amount of cases increased respectively. 40% and 63%.
It is worth noting that not long ago, the EU and the United States both refused to automatically grant China's market economy status in December this year. Among them, overcapacity and external dumping in the steel and other industries are the common reasons.
Wu Yuetao, deputy director of the Executive Directorate of the China International Experience Exchange Center, said that steel, as a freely flowing commodity, will not be surplus here, but there is nowhere else left. In fact, the global crude steel capacity utilization rate in 2014 was 73.4%, OECD The (OECD) countries are 76.4%, and China is 72.8%. Overall, China is generally and internationally flat. "Europe and the United States have made China's steel overcapacity an excuse for their trade remedy and linked to market economy status, which is unacceptable."
Bai Ming, deputy director of the International Market Research Institute of the Ministry of Commerce, told 21st Century Business Herald that since the 15 years of WTO accession, because of the failure to recognize China's market economy status, foreign countries can easily launch anti-dumping investigations against Chinese products based on the price of the surrogate country. As the world's most seriously polluted anti-dumping and countervailing ("double-reverse"), China has been the biggest target of anti-dumping for 21 consecutive years.
“There are a lot of anti-dumping cases against steel, because it is too easy to launch such measures. If they have the right to choose, there will be abuse of anti-dumping measures.”
At the beginning of this month, the European Commission once again made anti-dumping measures against the two types of hot rolled coils and plate steel products originating in China. The head of the Trade Relief and Investigation Bureau of the Ministry of Commerce said that the EU has used no Fair and unreasonable alternative country survey methods, frequent implementation of trade remedy measures, have obvious trade protectionist tendencies.

20% market share "ceiling"
In fact, China does not encourage large-scale export of steel products. Instead, it has adopted a series of measures to control the export of steel products, such as the export tariffs on some steel products and the export tax rebate rate for steel products.
However, with the increase in international competitiveness, China's steel exports in 2015 increased by 20%, surpassing 100 million tons for the first time, reaching 112.4 million tons. Xu Xiangchun expects this year to be about the same level as last year, and this is enough to worry foreign steel mills.
"China's steel industry has no problem in terms of supply capacity, quality and price, and exports 150 million or 200 million tons of steel. It does not say that the proportion of exports is comparable to that of Japan and South Korea. Even if it reaches the world average, exports can exceed 200 million. Ton."
Although China's steel exports are mainly concentrated in developing countries, the volume of hundreds of millions of tons will inevitably be transmitted to European and American markets through price. This is the direct cause of the spread of trade protection cases.
More importantly, in 2015, China's steel exports accounted for 24% of the world's steel export market, exceeding 20% ​​for two consecutive years. Xu Xiangchun believes that China's steel exports have touched an invisible "ceiling".
Xu Xiangchun said that the steel industry has the characteristics of economies of scale and is in an important position in the national economy. Governments of various countries usually give high protection, and the world steel export market share has thus been relatively dispersed. "The international steel market is not a free market, how much steel exports? It depends mainly on whether the exporting country accepts it, and its exports therefore have invisible ceilings."
This ceiling can be measured by market share: once it exceeds 20%, it will encounter strong resistance from the importing country steel mills, superimposed on economic recession and severe overcapacity, which is more likely to become the target of public criticism, dumping, subsidies, environmental protection, labor, quality and even exchange rate. Industrial policies and so on may all become excuses for trade frictions.
Japan is a typical example. In 1971, its export steel accounted for 20% of the world's total steel trade for the first time. In the following period, the “Japan economic threat theory” became popular, and steel trade frictions continued to intensify.
Xu Xiangchun said that the current global trade volume of steel has been maintained for more than 400 million tons. China's exports are 100 million tons, accounting for nearly a quarter of the world's steel exports. This share is close to Japan's share in 1973. In the long run, China's steel exports have little room to rise.
There are two possibilities for future development: First, steel mills withstood the pressure of trade friction and continue to increase steel exports, which will lead to a strong foreign rebound. The Chinese government will take countermeasures to further escalate trade frictions; the second is China’s use of The WTO dispute settlement mechanism responds to trade frictions. On the other hand, it takes the initiative to control the number of exports, release clear signals, appease the sentiment of foreign steel mills, and cool trade frictions, so that China's steel exports can be stabilized for a period of time (such as 10 years). About 100 million tons.
The two evils are taken lightly, Xu Xiangchun believes that the latter may be a better choice. "Future exports will strike a balance between China's steel superiority and trade friction resistance: resistance is high, and appropriate restraint; resistance is small, waiting for more opportunities to export," he said.

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