Chinese steel export official defends industry

Chinese steel export official defends industry China should be lauded for not upsetting the balance of supply and demand of steel worldwide despite its growing production and consumption, Chen Haoran, chairman of the China Chamber of Commerce of Metals, Minerals and Chemicals Importers and Exporters, said at a conference in Hong Kong Wednesday.
   'China's steel industry is not export oriented,' Chen said. 'It is the consensus in China that we do not need to make steel in a big way by buying raw materials like iron ore from the international market with increasingly higher prices and lavishly consuming other natural resources domestically while leaving pollution to our people. The objective of China's steel industry is to strike a balance between domestic supply and demand. It is not imposing and will not impose any threat on the supply-demand balance in the world market.'
   Chen also said China needs to continue to ramp up its production to meet growing domestic demand.
   'China is not strong enough in steel,' he said. 'China's steel industry must be further consolidated. China must produce more high value-added products to meet the domestic demands. Our industry should be more efficient in energy conservation and more environmental friendly for its sustainable development to ensure the national economic security.'
   He also said that China isn't as big a consumer as it's made out to be considering the size of its population.
   'The current rate of apparent consumption per capita in China is still relatively low,' Chen said. 'China's apparent consumption of crude steel is only 300 kilograms while in Japan, the U.S. and Germany it is between 400 and 600 kilograms. In South Korea it is 800. Normally in the industrialized process the apparent consumption of crude steel should be 500 to 1,000 per capita. Therefore there is still much room for China to increase its apparent consumption of crude steel in the years to come.'
   China in 2006 became a net exporter of steel for the first time, despite its rising demand, but Chen said that's only a short-term situation.
   'Nobody has the right to block China from developing its steel industry because it is a right to development entitled to the Chinese people,' Chen said. 'During the 26 years from 1980 to 2005 China was a net steel importing country buying from the world market a net quantity of 295 million tons totaling $147.4 billion. During those years who ever cared that China had bought too much steel? Why should people care the change of status of China from a net importer to a net exporter just for the very first year?
   'China's export surge is only temporary. With the narrowing of price gap between international and Chinese markets, and the launch of policies by the Chinese government for four consecutive times adjusting VAT refund for exports and increasing export tariff on a group of steel products, it is estimated that the growth of Chinese steel export will return to a normal level gradually. The drop of China's export of steel to the U.S. market is a case in point. The export to the U.S. market in August shows a very sharp drop, down by 32.1 percent over the same period of last year. China's export of steel to the U.S. market in the first eight months also drops by 7.3 percent over the same period of last year.'
   Lastly, Chen blasted U.S. steel producers who cry foul over Chinese producers undercutting them on price.
   'It is unprecedented that in less than two months from May to June this year the U.S. steel industry filed three trade remedy cases against Chinese export of steel products,' Chen said. 'The Chinese steel industry has expressed their strong opposition to and serious concern about it. The U.S. still refuses to recognize the market economy status of China and consequently in antidumping proceedings involving China it is the usual practice of the U.S. Department of Commerce to calculate the normal value by surrogate value, which results in high dumping margins for the Chinese products involved. At the same time the U.S. Department of Commerce carries out countervailing investigation and adopts countervailing measures against the same products. This 'double counting' practice constitutes a violation to the U.S. law and the U.S. liability under the WTO rules. We strongly oppose this unfair and discriminatory treatment to China.' ' Eric Johnson