晟鑫冷轧

Data from the General Administration of Customs on January 13 shows that from January to December 2024, China exported a total of 110.716 million tons of steel, a year-on-year increase of 22.7%. This figure is also the highest level since 2015. In the same industry downturn cycle, with the same high export volume, what are the similarities and differences in the situation facing steel foreign trade?
Let us briefly compare the various situations before and after 2015 with the current situation.
In terms of export volume, in 2015, China exported 112.4 million tons of steel, a year-on-year increase of 19.9%, setting a historical record. The export volume and growth rate were similar to the current situation, but the difference is that in the last two months of 2024, the industry generally had a clearer expectation of tariffs and other policies after Trump's election, which also stimulated the export volume to maintain a high level during the usual off-season, while in 2015 there was no such clear phase.
In terms of policy, in 2015, China's steel industry faced the problem of overcapacity, and the government introduced a series of policies to promote structural adjustment and transformation and upgrading of the steel industry. For example, the "Steel Industry Adjustment Policy" (draft for comments) was released, aiming to guide the healthy development of the industry; the Belt and Road Initiative also promoted the export of steel products to countries along the route, expanding the international market. Since 2023, the "Steel Industry Stabilization Work Plan" has been released, emphasizing technological innovation and green development under the guidance of high-quality development requirements. At the same time, the state encourages enterprises to optimize export structure and improve product added value through policy guidance. For example, the export of high value-added products such as new energy vehicles has driven the indirect export of steel.
In terms of fiscal and tax policies, China canceled the export tax rebate for boron-containing steel from January 1, 2015, involving four types of steel products. In this round of cycles, in 2021, China canceled the export tax rebate for steel, and although the export volume dropped significantly in the short term, after 2022, China's steel exports still showed a strong recovery momentum, and the export share in the global market gradually increased. The export tax rebate rate is directly related to the profit level of enterprises. The cancellation or reduction of export tax rebates will force enterprises with weak competitiveness and high dependence on export tax rebates to exit the market to a certain extent, promoting an increase in industry concentration, while strong and efficient enterprises benefit.
It is worth mentioning that in November 2024, the export tax rebate for commodities such as copper and aluminum, which are also raw materials, was canceled. In addition to the export tax rebate, various subsidies from local governments are also being cleaned up. The previously announced "Regulations on Fair Competition Review" also clearly prohibits relevant units from providing selective and differentiated financial rewards or subsidies to specific operators, with the core purpose of improving the marketization level of enterprise operations. The adjustment of this export tax rebate helps to promote the industry to clear some backward production capacity.
In terms of the external environment, with a large amount of exports, there were as many as 37 anti-dumping and anti-subsidy cases against China's steel products in 2015. In 2024, the number of anti-dumping investigations against China's steel industry has also increased, with about 30 cases filed throughout the year, covering regions around the world, mainly in Vietnam, Brazil, the European Union, South Africa, etc., involving mainly plate products. After the newly elected President Trump took office, it is very likely that new tariffs will be imposed on Chinese goods, affecting the indirect export and transshipment trade of steel.
Looking back at China's annual steel export situation, the export volume and price trends show an inverse relationship: during the steel price increase cycle, the export volume declines (2016-2020); during the steel price decline cycle, the export volume increases (2012-2015, 2021-2024). The logic of the inverse relationship between steel export volume and steel prices is that steel prices are more influenced by domestic demand pricing. As the world's largest crude steel producer, the proportion of export volume to production fluctuates between 5% and 10%, which means that more than 90% of production is digested domestically, so steel prices are dominated by domestic demand. This also indirectly confirms the response from the spokesperson of the General Administration of Customs on January 13: "China's steel industry continues to innovate and upgrade, mainly to meet domestic steel demand, while also providing innovative and high-quality products for many countries. China's steel exports comply with market principles and World Trade Organization rules."
Reviewing the previous export situation is worth referencing for the industry. At the same time, in this round of cycles, in addition to the increased risk of trade friction and other issues, China's steel export trade also faces some new problems.
First, the price advantage has weakened. Although China's steel export prices are relatively low, the decline in global inflation levels and the increase in steel supply from emerging steel-producing areas such as Southeast Asia have weakened China's price advantage, squeezing some overseas steel demand.
Second, the global manufacturing recovery is slow. In December 2024, the global manufacturing PMI was 49.5%, still fluctuating in the contraction range, and the recovery of external demand is relatively slow, which may affect China's direct and indirect steel exports.
Third, "involution-style" competition has not stopped. Currently, the situation of "increased volume and decreased price" in steel exports is obvious, causing waste of production resources in steel mills, and is likely to lead to raw material price premiums, trapping both steel companies and export traders in a dual squeeze of low-profit traps.
In response to the above issues, it is recommended that steel companies and traders continue to implement the export principle of "encouraging high-end, restricting low-end, and combating illegal activities": First, improve product quality and technical level. By means of technological innovation and process improvement, enhance the quality and added value of China's steel products, and strengthen international market competitiveness. In the recently announced 2024 annual performance forecast for listed companies, some steel enterprises that have optimized their operations and product structure are showing stronger competitiveness through industry-leading profit margins. Second, diversify the layout of international markets. Actively explore emerging markets, disperse trade risks, and respond to the pressure of increased overseas supply. Third, strengthen communication and international cooperation. On the one hand, through communication to a certain extent alleviate "involution-style" vicious competition; on the other hand, by participating in the formulation of international standards and rules, enhance China's steel industry's international discourse power and reduce trade friction.
Looking ahead, although China's steel exports face significant resistance due to trade friction pressures and the decline in international bulk raw material prices, and the cancellation of steel export tax rebates will suppress the export of low value-added steel products to a certain extent, compared with other countries and regions, China's steel exports still have cost advantages, and domestic enterprises will still actively seek exports. It is expected that by 2025, with the joint efforts of steel enterprises and traders, China's total steel exports will still maintain a high level. (Guo Daqing)

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