SHANGHAI (Interfax-China) -- United States steel product imports increased 12.7% in May this year compared to April, due to increased imports from China, although U.S. steel imports in May were down 18.5% year-on-year, , according to a preliminary report from the American Institute for International Steel.
According to David Phelps, AIIS president, the steel product import increase in May reflects two factors.
"The large increase in imports from China is a direct response to anticipated changes in VAT rebates and export licensing under consideration by the Chinese central government at the time these products were ordered. Some orders were clearly advanced in anticipation of the significant changes in the terms of trade, which have subsequently been announced by the Chinese government," Phelps said.
"We expect that once these changes have been fully instituted, imports from China will stabilize again," Phelps added.
There was also an increase in the import of both wire rod and rebar, reflecting the strong non-residential domestic construction market. The decline in hot-rolled sheet and semi-finished product imports also reflects market conditions at the time of ordering, he noted.
Total U.S. steel product imports amounted to 2.85 million short tonnes (2.59 million tonnes) in April this year and 3.21 million short tonnes (2.91 million tonnes) in May, up 12.7%.
According to the report, U.S. steel product imports plunged 22.1% from 18.9 million short tonnes (17.15 million tonnes) in the first five months of 2006 to 14.7 million short tonnes (13.33 million tonnes) when compared to the same period this year.
The data shows that semi-finished product imports in the January to May period dropped 36.8% year-on year from 4.2 million short tonnes (3.81 million tonnes) in 2006 to 2.7 million short tonnes (2.45 million tonnes) this year. Semi-finished product imports in May this year amounted to 437,000 short tonnes (396,439 tonnes), diving 42.2% from 757,000 short tonnes (686,738 tonnes) last year.
The Chinese government increased the export tax on steel products from between 5% and 10% previously to between 10 and 15% on June 1 this year.
Exports of 83 types of steel products including wire, hot-rolled plate and steel section are now levied at between 10% and 15%. This move follows the cancellation of export tax rebates on the 83 types of steel products on April 15 this year.
Commentary
China's steel products exports actually fell by almost 14% in May, although exports over the first five months were up by 116%. Over the same period, China's trade surplus on steel products was $9.44 billion. Taxation policies may have a short-term affect on trade imbalances, yet, as domestic prices continue to fall, margins will be recoverable. Though huge surpluses may result in disputes, China's steel industry has evolved to the degree that it now relies upon significant international trade to sustain itself.
