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"Zero Tariff" will be the "quick fix" for steel exports?

Release date:2018-12-18 The author:www.xapyyj.com Click on:

Will “zero tariffs” be the “quick fix” for steel exports?

It is an indisputable fact that this year's steel exports have suffered from Waterloo.

According to the latest statistics from the General Administration of Customs, China exported 5.35 million tons of steel in November this year, an increase of 370,000 tons from the previous month, down 34.1% year-on-year. From January to November, China exported 69.83 million tons of steel, down 30.7% year-on-year. According to the current situation, it is difficult to make a major breakthrough in steel exports in December. The overall export of steel products this year is likely to be less than 80 million tons, setting a new low in total exports in recent years.

In my opinion, this year's steel exports are cold, for the following reasons:

First, the domestic steel price premium is obvious, and the enthusiasm of traders and steel mills is not high. Affected by the supply-side reform dividend of the steel industry, this year's steel prices in the domestic market have been leaping forward, and rebar has recovered a relatively high point of 5,000 yuan. Under this circumstance, the profit of domestic steel prices per ton of steel has soared. Under this mode of selling a good price without leaving home, the export enthusiasm of steel enterprises will naturally be greatly reduced.

Second, anti-dumping and trade protectionism have begun to show signs of restraining China's steel exports. In recent years, due to the skyrocketing total of China's steel exports, foreign countries' endorsement measures against China's steel exports have emerged in an endless stream, and the scope of their attacks has extended from the past export prices to the intellectual property field. Affected by this, in the case of continued trade friction, the decline in China's steel exports is also a matter of course.

As one of the three troikas in China's steel industry as the domestic demand, steel exports play an important role in the stability of the Chinese steel industry. In particular, with the gradual disappearance of the supply-side reform dividend, a large amount of returning resources will definitely affect the stability of the domestic market. Therefore, at this time, only the steady growth of exports can ensure the smooth operation of the entire industry.

Because of this, in order to encourage China's steel exports to regain their glory, on December 15, 2017, the State Council Customs Tariff Commission issued the "Treaty Adjustment Plan for 2018", canceling the provisional tariffs on the export of bars, rebars and wires, and reducing the 200 series. Temporary tariffs on the export of hot rolled stainless steel coils, steel ingots, billets and some ferroalloys.

It is not difficult to find through this information that the main export force of steel such as rod and wire and rebar will be zero tariff in the future, which will play a significant role in enhancing the price advantage of China's steel export. On the whole, zero tariffs help to reduce the export cost of related steel products and condense the price advantage of products going out.

First, taking the export data for the first 10 months of 2017 as an example, the export volume of rebar is 14.05 million tons, accounting for 21.79%. The vast majority of other export steel products enjoy tax rebate, accounting for 78.21%. Since the original export tax rebate policy is more favorable than the cancellation of tariffs, the introduction of new export tariff rules will not affect the export steel that originally enjoyed the tax rebate, but will reduce the original export that cannot enjoy the tax rebate. Steel costs.

Second, the export of steel products is passive, and the elimination of tariffs contributes to the increase in total exports: although China's steel exports accounted for about 10% of crude steel production in recent years, it has always shown a “reverse price and price” pattern, indicating domestic steel exports. The competitive advantage lies mainly in price. After the implementation of the new tariff regulations, it will help reduce the cost of some export steel products and enhance the competitiveness of China's general steel exports, which will help alleviate the impact of the weakening of domestic demand in the future.

Taking the average rebar export price in October as an example, the 15% tariff is eliminated, which is equivalent to lowering the export cost by about $75. We have made a regression analysis of the average export price and export volume of rebar since 2009, and then measured the price after canceling the tax rebate. If the tariff is cancelled, the rebar export volume will reach 23.94 million tons in the first 10 months of 2017. Compared with this year, the actual rebar export volume increased by 9.89 million tons, an increase of about 70%.

Third, domestic companies are more sensitive to international price fluctuations. Due to the cumbersome customs declaration procedures and the long-term domestic steel export orders from the order to the final delivery cycle, once the market price fluctuates greatly, the risk of loss of the enterprise is easy to open. Now, after zero tariffs on steel export prices, steel companies have eliminated the process of export tax rebates, which will further simplify the export process, improve the efficiency of China's steel exports, and shorten the delivery cycle. Under this circumstance, the impact of price changes on enterprises will gradually shrink, thereby effectively reducing the risk of losses caused by domestic steel premiums in domestic enterprises, thereby increasing the enthusiasm of domestic enterprises for export.

Fourth, reduce the cost of steel exports in China. In the past, the average tax rate for Chinese steel exports was around 15%, and some “savvy” traders were able to get a 9% to 13% export tax rebate in the export process. Even so, Chinese enterprises still have 2% to 6% of export costs for steel exports. Nowadays, the export tariffs for steel, wire, rebar and other steel exporters have been eliminated. In the future, China's steel export costs will be greatly reduced. Therefore, the price advantage in overseas markets will be released again. Taking rebar as an example, the current export price is about 5,000 yuan. Once the export tariff is cancelled, the cost compressible space ranges from 100 yuan to 300 yuan. Such a large cost adjustment space will inevitably make Chinese steel more competitive in the market. This will play a crucial role in restoring the increase in steel exports.

In short, tariff adjustments in the long run will help the overall volume of steel exports rebound. However, given the severely high premium in the domestic market, the small-scale adjustment of steel export tariffs in the short term has little effect on the overall pattern of steel exports. In particular, the most common excuse used by European and American countries to boycott Chinese steel products is low-priced dumping. After China's elimination of steel export tariffs, this situation may become more serious. Therefore, trade barriers are not only difficult to break, but may even face more severe situations. Because of this, in the latter stage, the results of this tariff adjustment still require the market to re-verify.

    Xi'an Pengyuan Metallurgical Equipment Co., Ltd. was established on February 20, 2017. The company is located in Xi'an, Shaanxi, China. Its main business is the design and manufacture of metallurgical equipment (electric arc furnace, submerged arc furnace, ladle refining furnace, other refining furnaces and metallurgical auxiliary equipment). The company's vision is to become a service-oriented leading enterprise that can provide users with advanced and applicable complete smelting technology solutions. The company is determined to make “Pengyuan Metallurgy” into the electric furnace industry. Excellent brand. Pay attention to us, keep abreast of the latest developments in the industry, hotline: 13819831910.

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