China's Exports of Steel Billets Soar Despite Tariff Hike

Despite the fact that China slapped a ten-percent tariff on steel billets in November 2006 to contain output, steel billet exports have soared, jumping 54.4 percent the very month the tariff came into force.

In November, China exported 1,480,000 tons of steel billets, 54.4 percent up over the previous month, according to customs figures.

Billet exports for the January-November period reached 8,540,000 tons and were worth US$3,207.223 million, up 30.7 percent and 28.4 percent respectively year on year.

Exporters, expecting the government to raise the tariff by another five percentage points, have lifted billet export prices by five to US$10 per ton from Jan. 1, 2007.

The government's restrictive policy has proved no match for robust international demand.

The production of steel billets, which consumes an enormous amount of energy and resources and generates serious pollution, has been discouraged by the government in recent years through a series of policies.

Xu Xiangchun, a senior executive of the Beijing Lange Steel Information Consultancy Co. Ltd., said the current tariff rate should not be changed. He said billet exports will fall when international demand shrinks.

Market forces are more efficient than administrative tools, some analysts said.

If the government continues to raise export tariffs, overseas billet manufacturers will corner the lucrative international market, Xu said.

(Xinhua News Agency January 13, 2007)