China's flat steel exports hit a record high in April

China exported a total of 5.3 million tonnes of flat steel in April, the highest monthly volume since January 2006 when Mysteel started to monitor the country's Customs data. The record-high monthly exports resulted both from robust sales, plus the determination of sellers to ship their products abroad before their export tax rebates ceased from May 1, market sources said.

April's volumes were up 9.5% on month or by a notable 30% on year, and took total flat steel exports over January-April to 16.7 million tonnes and accounting for 65.1% of China's finished steel exports, data from General Administration of Customs (GACC) on May 18 showed.

"Steel mills and traders tried to deliver their goods first to 'bonded zones' before the removal of the tax rebates came into force, so that they could still enjoy the rebates," an official with a steel mill based in East China's Jiangsu province observed.

On the day that the steel products entered one of China's 100 or so Comprehensive Bonded Zones (CBZ)s, special areas supervised by Customs, they were viewed as being exported, so were not affected by the tax rebate cancellation, sources noted.

On April 28, the finance ministry had announced the removal of rebates - mostly at 13% - on 146 steel products from May 1, taking up around 70% of China's total steel exports, as Mysteel Global reported.

However, long before the rebate policy was released, there had been rumors on when and how the taxes would be adjusted, which had prompted Chinese steel suppliers to take preparatory measures such as temporarily withholding offers or delivering their products to CBZs, sources told Mysteel Global.

Over May 1-15, the rebate cancellation had driven Chinese steel export prices up by over $120/tonne, before dipping slightly over the past few days, according to Mysteel's tracking. This had weakened the price competitiveness of Chinese steel products against their rivals in international markets, sources noted, but as the global shortage of flat steel - especially hot-rolled coil - persists, so Chinese steel exports remain hot, they said.

On May 18, the price of China-origin SS400 4.75mm HRC stood at $1,006/tonne FOB from North China's Tianjin port, up $85/t from April 30, while Indian-origin HRC of the same grade was at $1,050/t FOB as of May 18, the tracking data show.

In April, China's steel bar exports totalled 1.2 million tonnes while wire rod exports reached 210,000 tonnes, taking the totals over the first four months to 4.2 million tonnes and 710,000 tonnes, up 47.5% and 21.9% on year respectively, GACC's data showed.

Written by Olivia Zhang, zhangwd@mysteel.com

This article has been published under an article exchange agreement between Mysteel Global and SteelMint.