China is considering imposing more tariffs on steel
exports as it seeks to achieve twin goals of capping domestic production and
taming the surging prices that have fanned concerns about inflation.
Potential rates being discussed range from 10 to 25
per cent and products include hot-rolled coil, according to two people familiar
with the matter, who asked not to be identified because they are not authorised
to speak to the media.
Officials are seeking to implement the levies in the
third quarter, though they are still subject to final approval, one of the
people said.
The world’s biggest steel industry already scrapped
rebates on export taxes and raised tariffs on some products from the start of
May to keep more supply at home. The new levies will target some products not
covered by the earlier round, according to one of the people.
The message this sends
the market is that moral hazard exists among Chinese flat steel producers, who
might be tempted to ignore government mandates given extremely wide margins
China’s customs agency did not immediately respond to
a fax seeking comment on the plans. Hot-rolled coil fell 0.8 per cent, while
rebar also declined and Chinese iron ore futures dropped 2 per cent.
“The message this sends the market is that moral
hazard exists among Chinese flat steel producers, who might be tempted to
ignore government mandates given extremely wide margins,” said Atilla Widnell,
managing director at Navigate Commodities.
Widnell expects that any flat-rolled steel exporters
in China would be able to cope with a tariff of up to 20 per cent, though it
would hurt smaller, higher marginal cost producers, he said.
China is the biggest steel exporter and is
undertaking an industrial overhaul that has seen it vow to reduce output in
2021 to curb carbon emissions from
one of its dirtiest industries.
https://www.scmp.com/