Tax rebate policy may be difficult to quickly restrain the export of steel resources

According to the analysis of “China Metallurgical News”, the “boots” of steel product tariff policy adjustment finally landed.
As for the long-term impact of this round of adjustments, “China Metallurgical News” believes that there are two important points.

One is to expand the import of recycled iron and steel raw materials, which will break the dominance condition of one side about iron ore. Once iron ore prices are stabilized, the steel cost platform will move downward, driving steel prices into a phased adjustment cycle.
Second, the fluctuates between China domestic and foreign markets price difference. At present, although China domestic steel prices continue to rise, the China domestic market is still in a “price depression” in the international market. Especially for hot-rolled products, even if the export tax rebate is cancelled, the China domestic hot-rolle product prices are still about US$50/ton lower than other countries, and the price competitive advantage is still there. As long as the export profit margin meets the expectations of steel enterprises, simply canceling export tax rebates will not be able to quickly realize the overall return of export resources. In the author’s opinion, the turning point of the return of steel export resources is expected to occur when China domestic steel prices rise again or when prices in overseas markets pull back from high levels.
In general, the adjustment of the tariff policy on steel imports and exports will bring certain repairs to market supply, demand and costs.

However, with the policy of reducing crude steel production unchanged, whether it is short-term or long-term, the market is likely to remain at upply tightening state. Under this circumstance, it is difficult for the steel price to see a sharp decline in the later stage, and more will be in a high consolidation situation.