CISA denies steel dumping accusations

Export prices reasonable, association says

The price of steel exported from China is in a reasonable range and the export ratio of the total volume of China's steel production is not high, an industrial association said Wednesday, denying criticism that Chinese firms export steel at cheap prices that disrupt global markets.

The average price of steel exports fell by $74 per ton year-on-year in the first three quarters to $783 per ton, but the price is still within a reasonable range and cannot be regarded as dumping, Zhang Changfu, vice chairman of the China Iron and Steel Association (CISA), said at a press conference when answering a question from the Global Times.

At that price, Chinese steel exporters can still make a profit and the sale price has not fallen below the production cost, Zhang said.

The profit margin for major Chinese steel firms rose by 0.30 percentage points year-on-year to 0.71 percent in the first three quarters of the year, according to data released Wednesday by the CISA.

Reuters reported on Tuesday that China has boosted exports of steel to take advantage of tax exemptions in some Asian countries, triggering accusations that mills in the world's biggest producer are using the rebates to sell surplus steel cheaply.

Kevin Dempsey, senior vice--president of the American Iron and Steel Institute, was quoted by the Financial Times as saying on October 21 that China is looking to export the steel it can't sell domestically, and that this is disrupting markets around the world.

But Zhang said China has never specifically encouraged steel exports, adding that there is no export-oriented policy for the industry, which generates relatively high pollution.

As the total volume of China's steel exports is relatively small, it could not disrupt global markets, Zhang noted.

According to the CISA's report, China's steel exports increased by 39.3 percent in the first three quarters this year to 65 million tons, which is only around 10 percent of the total volume of China's steel production. This ratio is relatively low, compared with a level of over 30 percent in some other countries and regions.

The reason for the surge in China's steel exports is that domestic steel prices have dropped significantly, while prices in international markets have fallen by less, the CISA report said.

The China Steel Price Index fell by 14.14 percent to 86.35 at the end of September, the 12th consecutive month it had come in below 100.

Meanwhile, developed countries including the US have imposed heavy duties on Chinese steel imports.

The US Commerce Department decided on October 7 to impose final dumping margins of up to 407.52 percent on imports of non-oriented electrical steel from China.

There have been eight anti-dumping investigations into China's steel industry since September 4, Shanghai Securities News reported on October 11.

Steel demand in developed countries has declined since the financial crisis and they launched anti-dumping investigations into Chinese firms in order to protect their own domestic steel industries, Li Chunding, a research fellow at the Institute of World Economics and Politics at the Chinese Academy of Social Sciences, told the Global Times on Wednesday.

The total volume of China's steel exports will reach 80 million tons in 2014 and there may be some policy adjustment for exports due to rising trade friction, the CISA said in the report.

There has been speculation that China may cancel the tax refund for steel exports in the near future. Chi Jingdong, deputy secretary-general of the CISA, was quoted by the Shanghai Securities News report as saying that China has no plans to increase steel exports and that it will cancel the tax rebate within the year.

At present, China's steel exporters can enjoy varying rates of tax refunds from the government.

China should follow its own pace to reform its tax rebate policy instead of bowing to external pressure, Li said, given that tax rebates are widely accepted globally as a way to solve the problem of double taxation.