Chinese steel exports boom despite curbs

Chinese steel exports in the first nine months of 2007 have increased significantly on a year-on-year basis despite myriad steps taken by Chinese authorities to rein in exports. China is the world's largest steel producer.

For instance, the government has removed value-added tax rebates on most steel exports and has also added some export taxes in an effort to force small and medium-sized steel makers to close down or merge.

In spite of these measures, Chinese steel exports during January-September 2007 amounted to 49.5 million tonnes, a rise of 73.2 per cent y-o-y, according to data gathered from the official Xinhua news agency and foreign brokerage houses. No doubt large integrated steel players in India like Tata Steel and SAIL have long term contracts with their key customers.

However, the growing fear is that surging Chinese steel exports could increasingly grab a larger chunk of the Indian spot steel market.

For instance, during April-July 2007, total Indian imports of finished carbon steel amounted to 1.45 million tonnes, a rise of 60.2 per cent y-o-y. A senior official of the Chinese Iron and Steel Association had also recently highlighted that their country's output in calendar year 2007 would reach 480 million tonnes, a rise of 14 per cent y-o-y.

In contrast, Indian steel production in the first nine months declined two per cent to 35.8 million tonnes, according to the International Iron and Steel Institute, the Brussels-based global industry body.

Analysts are, however, forecasting a moderation in Chinese steel output in calendar year 2008, given that key iron ore suppliers in Australia and Brazil are demanding a sharp rise in contract prices from April 2008.