Message from the SEAISI Sec. Gen


Mr. Roberto Cola, in his capacity as the President of the ASEAN Iron and Steel Council (AISC), was recently invited to speak at the 13th International Steel Market and Trade Conference hosted by the China Iron and Steel Association (CISA). The event was held in Shanghai, China from 31 March to 2 April 2015.

In his presentation entitled “ASEAN Iron & Steel Industry and ASEAN-China Steel Trade”, Mr. Cola highlighted the market disruption caused by the influx of steel products from China into ASEAN and the unfair trade practices by Chinese steel exporters in manipulating the loopholes in China’s export tax and rebate structure to bring out huge volume of cheap low value-added steel products. While complementing the recent move by the Chinese government to withdraw the tax rebate applied to the exports of certain boron-containing steel products, Mr. Cola opined that the measure would be inadequate to fully address the unfair trade competition faced by the ASEAN steel makers. He also pointed out that Chinese steel exporters were able to find ways to circumvent the revised tax measure by switching to the use of other alloy elements in order to continue to benefit from the tax rebate. Mr. Cola proceeded then to call for a holistic approach to the problem by adopting the following measures:

  • The removal of the export tax rebate to be extended to cover other boron-containing steel products such as section and hot rolled coil, width 600 mm and above.
  • China to institute immediate action to prevent circumvention by steel producers to continue to benefit from the export tax rebate by switching to the adding of other alloy elements to qualify for rebate under the “Other alloy steel” classification.
  • China to exercise voluntary restraint on its exports of steel products that are adequately produced in an ASEAN member country. These steel products can be identified through a dialogue with each ASEAN national steel association.
  • China to take effective action to address the problem of chronic excess steel production capacity in the country.

At the same conference, Mr. Wang Liqun, Vice Chairman of CISA, reported that China’s crude steel production in 2014 inched up marginally by 0.9% year-on-year to 823 million

tonnes while crude steel consumption declined 3.3% year-on-year to 739 million tonnes. As for 2015, Mr. Wang expected domestic demand of steel to continue to adjust to the “new normal” in China with the country’s economy switching from a high to a moderate growth path. He also projected that China’s steel export volume would continue to remain at the same level as last year or even higher. He might be proven right as China’s finished steel exports in the first three months of this year has already reached 25.78 million tonnes, an increase of 40.7% year-on-year. Thus the “China factor” is not likely to go away anytime soon and the intense competition from low-priced Chinese steel exports will continue to pose as a major threat to the steel industry in ASEAN. It is therefore appropriate that all the three papers to be presented in the session on “Strategic Challenges and Opportunities” at the upcoming 2015 SEAISI Conference & Exhibition in Manila, Philippines will have themes that are connected to the above. The papers are “ASEAN Options in the Face of a Slowing China” by CRU; “Production Cost and Steel Price Export to ASEAN” by Metal Bulletin Research”;    and   “Will the Rebalancing of China’s Economy See an End to the Growth of Chinese Steel Exports to ASEAN?” by Platts. It is still not too late to register and participate in the biggest steel event of the year in this region.  TAN AH YONG

SteelAsia Manufacturing Corporation

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