Steel Export Growth to Slow Down

Growth of steel exports from China, the world's top steel producer, will slow to 20 percent for the full year due to government efforts to curb breakneck growth in the first half of the year, according to an industry body.

Overseas shipment of finished steel products will hit 51.6 million tons in 2007, up from 43 million tons last year, Luo Bingsheng, vice-chairman of China Iron & Steel Association, said in Beijing.

The forecast growth rate would be the slowest since 2003, according to steel association data.

From January to June this year, steel products exports surged 97.7 percent year-on-year to 33.8 million tons.

However, Zhou Xizeng, a steel analyst with CITIC Securities Co in Beijing, said the pace of exports will not slow as much as Luo's estimate because demand and price in the international market remain strong.

Zhou said steel products exports will grow by 30 percent this year from 2006.

China has adopted measures since last year to control steel exports as part of its drive to tame the trade surplus and prevent trade conflicts with other countries. In the first six months of this year, the nation's trade surplus jumped 84 percent to $112.5 billion.

On July 1 China slashed export tax rebates for more than 160 steel products to 0 or 5 percent from 11-13 percent.

"As a result, steel products exports in the second half will be much less than in the first half," Luo said.

He said July-December exports will plunge by 40 to 50 percent from those in the first six months.

"But the policy doesn't mean the less steel exports the better. We should keep it at a proper level," Luo stressed.

He said exports should account for one-tenth of China's steel production.

In the first half of this year, crude steel production in China rose 18.9 percent to 237.6 million tons.

Luo predicted full-year production will climb 14 percent to 480 million tons.

The expected export slowdown in the second half will add supply in the domestic steel market, which could generate a glut and cause price tumbles at home, he said.

"Steel companies should cut excessive production to keep the domestic market stable," he said.

At the end of last month, international steel prices were 35.9 percent higher than in the domestic market on average, according to the steel association's data.

According to a government plan, steel production capacity of 35 million tons will be removed in China this year.

January-June crude steel consumption in the country climbed by 9.6 percent to 206.9 million tons. Luo said consumption will total 446 million tons this year, up 12 percent.