Steel Export Tariff Policy Increases To Curb The Rise Of Export Restriction, Driving Steel Profits Soaring

On July 29, the Tariff Commission of the State Council issued an announcement saying that, from August 1, 2021, the export tariff of ferrochrome and high-purity pig iron should be appropriately increased; On the same day, the Ministry of Finance and the State Administration of Taxation issued an announcement on the cancellation of export tax rebate for iron and steel products. The export tariff policy of iron and steel products has been adjusted again, and the will to give priority to meeting domestic demand will continue to be emphasized, which will escort the reduction of production capacity and structural optimization in the second half of the year.

For China's iron and steel industry, the second half of the year is faced with the heavy task of controlling production capacity, pressing output and adjusting exports. At the second meeting of the Sixth General Meeting of the China Steel Association held on the same day, Shen bin, President of the China Steel Association, pointed out that the steel industry should control production capacity, reduce production capacity and adjust exports in the second half of the year, so as to avoid sharp fluctuations in steel prices, At the same time, we should prevent the price fluctuation of bulk raw materials from causing pressure and risk to steel cost.

From a long-term point of view, to promote capacity reduction under the condition of stable domestic market supply will help to prevent domestic steel enterprises from overproduction and export, resulting in excessive carbon emissions remaining at home.

Shen Bin said that at present, the first draft of the implementation plan for reaching the carbon peak in the iron and steel industry has been completed, and the path, key tasks and carbon reduction potential of the industry have been basically clarified. Now, we are working hard to study the carbon quota allocation accounting scheme, formulate the verification standard and benchmark test specification for carbon emission of the iron and steel industry, and establish a low-carbon development standard system.

Steel price rises again due to production restriction

Since the end of June, many iron and steel industry production restrictions have been implemented in succession, and the reduction of production operations of enterprises has also been coming. Although it is in the traditional off-season, but the production restriction policy exceeded market expectations, iron ore prices tend to be weak, and steel prices have a strong trend.

For the future supply and demand relations may be tight, steel futures prices recently began to continue to rise. By the end of the afternoon of July 29, the price of rebar futures rose 1.95% to close at 5753 yuan / ton; Hot rolled coil futures prices rose 3.34% to close at 6104 yuan / ton. If compared with the low point in late June, the futures prices of rebar and hot-rolled coil both increased by more than 18%.

At the same time, iron ore in recent days began to shock decline. Among them, the domestic iron ore futures price dropped to 1114.5 yuan / ton, with a drop of 1.59% on July 29, 10% lower than the recent high value on July 7; Proctor's iron ore price index fell to 201.3 US dollars / ton, which was 12.4% lower than the previous peak of 230 US dollars / ton.

Since this year, the Ministry of industry and information technology has repeatedly stated that it is determined to reduce crude steel production to ensure a year-on-year decline in steel production in 2021. However, in the first half of this year, domestic and foreign economic recovery and steel demand exceeded market expectations, and steel prices rose. The high price of overseas steel has further promoted the growth of domestic steel export.

According to the data of the National Bureau of statistics, from January to June this year, the domestic crude steel output accumulated 563 million tons, an increase of 11.8% year-on-year. Under the stimulation of high profits in the first half of the year, the output of several major iron and steel provinces except Hebei has achieved positive growth. At present, many large steel producing provinces are facing greater pressure to achieve the goal of not increasing production or even limiting production throughout the year.

Wang Zhaohua, an analyst with Everbright Securities, pointed out that in the second half of the year, Guizhou, Chongqing, Gansu, Guangxi and Hubei had the largest reduction pressure on crude steel production, while Jiangxi, Heilongjiang, Inner Mongolia and Liaoning had a smaller pressure on crude steel production in the second half of the year.

Recently, the fall of iron ore prices and the rise of steel prices have led to the recovery of production profits of steel enterprises. According to the relevant people in the iron and steel industry, the profit per ton of main steel has been significantly improved, and the profit per ton of hot rolled coil has been close to 600 yuan / ton; There is an optimistic forecast that if the follow-up production restriction is strengthened, the profit of steel is expected to reach or even exceed the peak of the second quarter.

Regulating import and export taxes to stabilize the market

At present, after the arrival of the peak demand season, under the pattern of production restriction, the supply and demand of domestic steel market is bound to be tense, and the rising overseas steel prices will continue to affect the domestic market, and the price rise may become an inevitable trend.

At present, the steel price in the foreign market is significantly higher than that in the domestic market, and the enterprises are more willing to export. According to the data of the General Administration of customs, in the first half of this year, China exported 37.382 million tons of steel, up 30.2% year on year. Taking into account the import data of billets and steel products, the net export of crude steel reached 25.5427 million tons in the first half of this year, which has exceeded 17.03 million tons in the whole of last year.

In fact, while reducing the domestic steel production, the regulatory authorities are also adjusting the import and export tax rate of steel products to reduce steel exports and promote steel imports, so as to maintain the stability of the domestic market under the background of production restriction.

In May this year, China cancelled export tax rebates for 146 steel products. Now, policy is piling up again.

On July 29, the Tariff Commission of the State Council issued an announcement, saying that since August 1, the export tariff of ferrochrome and high-purity pig iron will be appropriately increased, and the export tariff of 40% and 20% will be implemented respectively after the adjustment; On the same day, the Ministry of Finance and the State Administration of Taxation announced that export tax rebates for 23 iron and steel industries would be cancelled from August 1.

Obviously, the cancellation of export tax rebate will weaken the export price competitiveness of relevant steel products, with the purpose of meeting domestic demand first and improving the guarantee ability of domestic steel resources.

Wang Jing, an analyst at Lange Iron and Steel Research Center, told reporters of the 21st century economic report that at present, the overall overseas steel market has shown signs of turning point. The expansion of steel demand has slowed down, the gap between supply and demand in the market has narrowed, and the action power on price is insufficient.

With the adjustment of overseas market and the rebound of domestic market, the price advantage of China's steel export gradually decreases. The cancellation of export tax rebate will further inhibit the steel export. It is expected that the steel export will gradually fall back in the second half of the year.

At the second meeting of the Sixth General Meeting of the China Iron and Steel Industry Association on July 29, Shen bin, President of the China Iron and Steel Association, said that China's economy will continue to grow in the second half of this year, but the growth rate on a month on month and year-on-year basis will decline; In accordance with the policy guidance of capacity control, output reduction and export export export, the steel industry should not only improve the dynamic adaptability of domestic steel products supply and demand, but also avoid the sharp rise and fall of steel prices; At the same time, we should guard against the pressure and risk caused by the price fluctuation of bulk raw materials on steel cost.

Steel carbon peak is on the way

In addition to production restriction, price stability and other issues, the vision of carbon peaking and carbon neutralization has also continued to promote the steel industry to deepen supply side structural reform. According to the requirements put forward by the Ministry of industry and information technology, the iron and steel industry should strive to achieve carbon peak ahead of schedule during the "14th five year plan", which is five years ahead of 2030; At the same time, China Baowu group's carbon peak is further advanced to 2023.

At present, the steel industry is the largest domestic carbon emission industry except energy, accounting for about 14% of the total carbon emission in China; In order to reach the carbon peak and carbon neutralization of the whole society, the steel industry is the first to bear the brunt.

At present, China's giant central iron and steel enterprises headed by Baowu are continuously promoting the merger and reorganization of the domestic steel industry. Through merger and reorganization, the industrial concentration is increased, while the steel output is reduced, so as to change the situation of scattered industrial capacity and insufficient competitiveness of enterprises.

A number of domestic steel enterprises are also exploring low-carbon development planning and formulating carbon peaking scheme and roadmap. In addition to conventional energy-saving and emission reduction transformation, energy structure optimization and other ways, more use of clean energy, improve the utilization rate of scrap steel resources are also gradually promoted; Innovation of process flow, EAF steelmaking, CCUs and other technologies are the direction of industry promotion. But for China's steel industry, which has an annual production capacity of more than 1 billion tons, it is difficult for the elephant to turn around.

Wu Xianfeng, deputy director of the atmospheric environment department of the Ministry of ecology and environment and a first-class inspector, pointed out that during the 13th Five Year Plan period, China's air pollution control has achieved very good results, among which the iron and steel industry has made outstanding contributions; However, the output of China's iron and steel industry is still very large, many enterprises are distributed in the key areas of air pollution control, the emission of steel industry is still in the forefront of the national industrial categories, and the task of reducing pollution and carbon is arduous.

Shen Bin said that at present, the first draft of the implementation plan for carbon peaking in the iron and steel industry has been completed, and the path, key tasks and carbon reduction potential of the industry have been basically clarified. Now, we are working hard to study the carbon quota allocation accounting scheme, formulate the carbon emission verification standard and benchmark test specification for the iron and steel industry, and establish a low-carbon development standard system.

In Shen Bin's view, during the "14th five year plan" period, China's iron and steel industry should promote high-quality development and deepen supply side structural reform, improve industrial basic capacity and industrial chain level, adhere to green development and intelligent manufacturing, control capacity expansion, promote industrial concentration and ensure energy security.

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