According to market analysts China's finished steel export has surprisingly fallen to 5.22 million tonnes in June down by 6.1% from May's 5.56 million tonnes. Therefore, Beijing might not rush into any imminent export tax adjustment.

Mr Xu Xiangchun senior analyst of Mysteel said that “Beijing would take steps once domestic steel prices roar up sharply and the steel export touches the benchmarking line of 6 million tonnes.”

He added that “However, domestic steel prices have not shown sign of steep run up following corrections. And the June export is expected to decline as a result of plummeting shipment to Vietnam and domestic output cutback during the Olympics. Therefore, new export tax change looks set to be postponed.”

China's finished steel export has started to rebound swiftly during March to May after hitting a record low in February and set a new high of 5.56 million tonnes in May up nearly 16.4% from April. The rapid export bounce has fanned concern about export tariff change.

A host of analysts have suggested that China's steel export volume be capped within 10% to 12% of the country's crude steel output. If so, the steel export in May has already touched the ceiling of 12%. Some industrial insiders estimate that the if June steel export exceeds 6 million tonnes and accounts for 12.6% of the steel production given annualized crude steel output reaches 47.62 million tonnes, the annualized steel export is likely to surpass the upper limit of 12%.

Another steel analyst predicts that China's high steel export is here to stay and new export tax change might come within this year. And the steel export won't slump drastically in the short term following the new tax give such huge price spread with international market. Meanwhile, HR alloyed bar and rod shipment has soared by 264% YoY in the first five months as steel exporters have taken advantage of the loophole in the tax policy. Therefore, the authority might adjust the export tax on certain steel alloy products in the future.

Market analysts said that the export tax would help erase the long time image of cheap Chinese steel products. And the government could increase tax revenue and curb steel export as well. Moreover, higher export tariff is set to keep more supply to domestic market and help alleviate the price run up and ease inflation pressure.

(Sourced from MySteel.net)