Business Spectator quoted a senior industry executive said China should adopt more generous export tax rebates for steel products to bolster the industry, where losses are worsening due to overproduction and sluggish domestic demand.
The collapse in export demand cut China’s shipments of steel products to the rest of the world by 60% in the first four months of the year and left China in an unusual position as a net importer of steel products in March and April.
Mr Luo Bingsheng deputy head of the China Iron and Steel Association was quoted as saying in the official Shanghai Securities News that China rebate policy needs quick and sweeping adjustments to stabilize domestic prices and maintain competitiveness.
Mr Luo said losses at 72 large and mid sized Chinese steelmakers in the first four months of this year reached CNY 5.18 billion compared with CNY 63.40 billion in profit last year.
Mr Luo blamed production increases at small steel mills for worsening an oversupply situation in the domestic market, triggering a tumble in prices. A Ministry of Commerce official said last month there was room for China to increase tax rebates for exporters including steel makers.
Export tax rebates were cited as a factor behind a dumping complaint last month by US steelmakers and the steelworkers union against Chinese makers of welded and stainless steel pipes used for oil and gas drilling. China has increased export tax rebates several times this year, most recently on March 27th improving access to the overseas market for some steel and stainless steel products as well as thousands of other categories of goods. But China, the world’s largest steel making nation has already encountered friction with its trading partners over its steel export tax rebates, including an anti-dumping investigation over steel pipe imports in the United States.