Why did China's steel exports in May still reach nearly 10 million tons?

Customs statistics show that in May 2024, my country exported 9.631 million tons of steel, a month-on-month increase of 4.4% and a year-on-year increase of 15.3%, with a decline in growth rate; the average price was US$783.7/ton, a month-on-month increase of 0.8% and a year-on-year decrease of 15.0%. From January to May, my country exported a total of 44.655 million tons of steel, a year-on-year increase of 24.7%, and the growth rate narrowed by 2.3 percentage points from January to April; the average price fell by 33.4% year-on-year, and the decline widened by 1.6 percentage points. Overall, steel exports in May still showed a trend of "increase in volume and decrease in price", and the monthly export volume remained at a high level of nearly 10 million tons.

According to the author's research and analysis, there are roughly four direct reasons for the increase in export volume in May: First, the steel exports in May were actually completed in February-March, and the export data in May was the fulfillment of the order volume at that time. Since April, export orders have gradually decreased, and it is expected that the subsequent customs settlement data will decline. Second, due to concerns about changes in export policies in the later period, some companies have made centralized customs declarations. Third, my country's steel exports still have price advantages, and steel exports are still motivated. Market agency statistics show that my country's hot-rolled coil export quotations are more than US$30/ton lower than those of India, Turkey, and the CIS. Fourth, after the Third Inspection Bureau of Qingdao Taxation Bureau announced a case of buying export, the larger-scale action expected by the market did not come. At the same time, the Iron and Steel Association revealed that it has been connecting with relevant state ministries and commissions to focus on cracking down on illegal activities such as "buying export", but due to factors such as the need to provide evidence, the results of this effort have not yet been reflected in the import and export data in May.

The fact that the export tax rebate for high-end steel products has not yet been restored is also an indirect reason affecting steel exports. The country canceled the export tax rebate for all steel products twice in 2021. In order to ensure the competitiveness of my country's high-end steel products in the international market, the China Iron and Steel Association has been strengthening communication with relevant ministries and commissions. First, it submitted the "Suggestions on Restoring Export Tax Rebates for High-end Steel Products" to the Ministry of Finance, and then drafted the "Suggestions on Stabilizing the Export of Some High-end Steel Products", which will be submitted to relevant ministries and commissions when the time is right. Under the current high export volume situation, coupled with the difficulty in proving that there are a large number of purchase orders, the implementation of the policy recommendations for restoring export tax rebates for high-end steel products has been hindered to a certain extent. The direction of the China Iron and Steel Association's recommendations has changed from "restoration" to "stabilization", reflecting its determination to make key breakthroughs in the high-end of the high-end. In essence, the export tax rebate for high-end products is a powerful weapon for adjusting the export structure. It can not only effectively alleviate the current trend of frequent steel trade relief investigations, but also give high-end steel products competitiveness and indirectly curb the export of low-end steel products. The Market and Import and Export Working Committee of the China Iron and Steel Association has made the restoration of export tax rebates for some high-end steel products a key task this year, and I believe there will be continuous progress in the future.

As of the end of May 2024, there have been 9 new trade remedy investigations on my country's steel, exceeding the total number of original trial cases from 2022 to 2023. Under the severe international trade situation, domestic steel companies have lowered their steel export target data. It is worth noting that data show that direct exports of my country's steel account for 1/3, and indirect exports account for 2/3. It can be seen that in order to truly resolve export chaos and build a healthy and orderly export order, it still requires the coordinated efforts of the government, associations, production enterprises, trading companies and other parties.