Rebate removal hits China rebar exports to Korea in 2022

The cancellation of export tax rebates on nearly 170 steel products by Beijing in 2021 is cited as a major reason why Chinese rebar exports to South Korea halved last year to just under 200,000 tonnes, down from 384,000 in 2021, according to industry reports from Seoul.

During 2022, South Korea imported 618,712 tonnes of rebar, down by a huge 35% from the year before, with the country's three main foreign suppliers - Chinese mainland, Taiwan and Japan - all registering decreases. South Korea's slowing economy due to the ravages of the COVID pandemic, plus the fall-off in Korean construction activity, contributed to the drop in import volumes.

However, the plummet in China-origin rebars was attributed to the Chinese government's removal of export tax rebates in May and August 2021 that effectively forced Chinese exporters to raise their prices to overseas markets, drastically reducing their competitiveness.

The Chinese government's hope was that more domestically produced steel, especially lower-end items, would remain in the country, as Mysteel Global reported at the time.

Among the three key shippers to Korea, the volume from Japan declined the least, the data showed. "Due to the impact of the (weak) Yen, the decrease in imports of Japanese rebar last year was small compared to Chinese mainland and Taiwan," Steel&Metal News noted.

In marked contrast, rebar exports from Vietnam soared last year, to over 5,770 tonnes, compared with just 36 tonnes in 2021, a jump which the industry daily attributed partly to the fact that more Vietnamese rebar makers have secured Korea Standards certification for their products.

Last July, Vietnam's huge Hoa Phat Group joined other domestic steelmakers including VSC-POSCO Steel in being awarded the right to attach the valued KS mark to their exports to Korea, an approval that allows their steel to be used in government-financed public works projects, among other advantages.

To date, over 30 foreign rebar makers including Chinese makers Tangshan Guofeng Steel and Shagang Group, and Japanese makers such as Tokyo Steel Manufacturing and Osaka Steel, have been awarded the KS mark, Mysteel Global notes.

Written by Russ McCulloch, russ.mcculloch@mysteel.com

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