TRADE STATISTICS – FACT OR FICTION?
The Chinese government provides
incentives to the steel companies to export certain products and disincentives
for others. However, the pressure is to encourage exports – particularly at this
time when available capacity outstrips domestic demand for a number of product
Incentives are given in the form of tax rebates for exports of value added
products, particularly, low alloy steels. There are disincentives, through extra
taxation for exporting semi-finished products. This was designed to avoid
exporting valuable resources including the use of energy for conversion of raw
materials into basic steel items.
Unfortunately, steel mills and traders often find easy ways to circumnavigate
the rules and regulations. Moreover, the authorities accept changes to historic
conventions which assist steelmakers to increase their volumes of exports whist
appearing to be setting up barriers to restrict them.
Typical of this type of activity are the regulations that restrict tax rebates
to exports of alloy steels. Traditionally, the definition of an alloy steel was
one which had a minimum of 0.5 percent of alloying elements to improve the
mechanical properties of the material. In China, extremely small quantities of
alloying elements which did not improve the mechanical properties of the
material became acceptable for receipt of a tax rebate if sold in export
As a result of China’s acceptance of a different definition for alloy steels to
those in the West, exports specified as alloy steels from China are near 80
percent of the total for many product forms. It is also worth noting that small
alloy additions can make steels unfit for purpose, in service, particularly,
after undergoing welding procedures.
An unusual feature of Chinese steel export statistics is the discrepancy between
foreign sales and receipts from both sides of the process. In 2014, China’s
combined total exports, of reinforcing bars, billets and blooms, to the rest of
the world, were reported at 213,000 tonnes. By contrast, receipts from Chinese
suppliers to other countries were recorded at 8.1 million tonnes. We would
expect a small discrepancy in the figures due to the time lag between despatch
and receipt of the material but not one of such magnitude.
Clearly the reporting mechanisms are not fit for purpose.
China Steel Review - September Edition
Also See: www.worldsteelnews.com
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