Record steel exports by the world's largest producer have sparked a global protectionist backlash, with 38 anti-dumping investigations opened in various countries since January last year. Major trading partners Vietnam and South Korea have imposed tariffs, arguing that domestic producers are being hurt by cheap Chinese steel.
In response, Chinese exporters are turning to steel billets, semi-finished steel blocks that generally face fewer tariffs. Exports in the January-May period tripled from a year earlier to a record 4.72 million metric tons, accounting for about 10% of all steel exports in the same period, customs data showed.
Tomas Gutierrez, chief data officer at consultancy Kallanish Commodities, noted that Chinese exporters should take every opportunity to sell their products, which are being squeezed from all sides by domestic tariffs and weak demand, a trend that began last fall.
“When billet exports are profitable, they will be exported,” Gutierrez stated.
According to customs data, Indonesia, the Philippines, Saudi Arabia, Italy and Türkiye are the top five destinations for steel billet exports. Indonesia, Türkiye and Saudi Arabia impose tariffs on some finished steel products, but not on steel billets.
Similarly, other major export destinations for finished steel, such as South Korea and Vietnam, do not impose tariffs on billets processed into finished products used in construction and manufacturing.
President Donald Trump's 50% tariffs on steel imports have disrupted parts of the transshipment trade, making it much less lucrative for countries to ship to the US.
The underlying reasons for the pressure on exports, whether billet or finished steel, include a weak Chinese economy and a battered real estate sector that has been unable to absorb the vast quantities of steel produced by an industry that has been dealing with production cuts for months.
The surge in billet exports has prompted warnings from China's state-backed industry body, which wants steelmakers to focus on higher value-added products.
The China Iron and Steel Association (CISA) has advised the government to limit billet exports, allowing the industry to focus on exports of higher-value steel products, according to a statement in local media last month.
Beijing is considering imposing an export tax on steel billets, a source close to the matter told Reuters on condition of anonymity because the talks are confidential.
The source added that details on whether and how much duties would be imposed had not yet been finalized.
China's Ministry of Commerce and CISA did not respond to Reuters' request for comment.
Source: Reuters
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