Focus on value will boost steel
Quality can offset impact of protectionism in overseas markets
The advantages of China’s steel industry should be reinforced and improved by concentrating on high value- added products that will enhance the sector’s international competitiveness and help avoid trade disputes, experts noted. Chinese steel exports in the first quarter of 2017 slumped 25 percent year- on- year to 20.73 million tons due to increased international trade protectionism and high domestic prices, the China Iron and Steel Industry Association ( CISA) said in a report on Wednesday.y It said that an “appropriate” amount of exported Chinese steel could carve out a steady market share in the world, helping Chinese steel companies to enhance their competitiveness by improving their quality and service.
Of China’s first- quarter steel exports, those of steel bars fell 50.7 percent year- on- year to 5.63 million tons, according to domestic news portal sina. com, which cited data from the General Administration of Customs.
“The slump of steel bar exports signals the government’s determination to cut excess and outdated capacity,” Li Xinchuang, president of the China Metallurgical Industry Planning and Research Institute, told the Global Times on Wednesday.
Meanwhile, rising international trade protectionism posesp an external factor that is curbing China’s steel exports, according to CISA’s report.
Wu Wenzhang, general manager of Shanghai- based consulting firm Steelhome, told the Global Times that at least 96 antidumping cases involving Chinese steel exports have been initiated in overseas markets kets since 2015. When it comes to steel exports, Li advised domestic producers to avoid large- scale ex
ports and price battles.
Also, “we can take advantage of foregin customers’ positive comments to expand our influence,” he said.
“We should continue to concentrate or high value-added products to such special ized sectors as auto manufacturing and ship building,” Wu noted.
In addition, China should should take notice of the rising trend of steel exports to countries and regions along the “One Belt, One Road” ( B& R) initiative even as overall exports slide a sina.com said on Wednesday.
Steel exports to B & R initia initiative markets reached 63.94 million tons in 2016 , up 2.7 percent year-on-year, of which 41 countries saw growing imports with Vietnam ranking first in terms of growth according to sina.com citing data from the Lange
Steel Information Research Center in Beijing.
Overall, China’s steel industry experienced sound growth in the first quarter despite the dive in exports and other challenges, the CISA report said.
Crude steel output in the first quarter grew 4.6 percent year- on- year with a daily average of 2.23 million tons, thanks to capacity cuts and a relatively low baseline in the previous year, according to the report.
In March, domestic steelmakers produced an average of 2.32 million tons a day, the highest on record, it noted.
The industry’s economic efficiency improved, it noted. Aggregate revenue for CISA members in the first quarter jumped 40.2 percent year- on- year to 839.33 billion yuan ($ 121.92 billion). Total profit stood at 23.28 billion yuan.
Steelmakers were able to take advantage of a surge in prices through mid- March as infrastructure spending and real estate construction boosted demand, Bloomberg News reports on April 17.
However, domestic steelmakers remain highly leveraged. The asset- liability ratio of CISA member companies sat at 69.97 percent at the end of March, which remained above the association’s medium- term target of 60 percent.
The CISA aims to get the ratio below 60 percent within three to five years.
Also, the list of steel companies that will first conduct de- leveraging should be confirmed as soon as possible, the CISA said during a meeting with the China Banking Regulatory Commission on March 9.