China: Big tasks sometimes require big efforts and also tough and uncomfortable cuts. While Europe only wants to talk about reducing excess capacities with the United States, other regions and countries are already actively getting serious. The Chinese government has already announced new regulation on May 6, 2021, which aims to reduce steel capacity by up to 30% and seems to aim at shutting down all steel and iron smelters built BEFORE 2016. In addition, further taxes and tariffs on steel products have been called for in the Chinese State Council.
China issues new regulation to cut steel excess capacity
China is continuing to increase the pressure on its own steel industry. On May 6, the Ministry of Industry and Information Technology published new regulations to this effect. According to these, Chinese steel producers must close significantly more old production capacities before they are allowed to build new capacities. The new regulation, which we have, comes into force on June 1, 2021.
More than 50 cities and provinces in China affected?
The capacity replacement ratio for provinces and cities particularly affected by air and environmental pollution will increase from 1.25 to 1.5, meaning that at least 150,000 metric tons of production capacity must be removed before 100,000 metric tons of new capacity can come online. In total, up to 50 cities and provinces in China appear to be affected by these and other measures.
The new regulation apparently aims to shut down all steel and iron smelters commissioned before 2016 and replace them with new facilities. This confirms the trend we have been seeing for a while now of the Chinese government consistently shutting down old and dirty blast furnaces and plants and replacing them with state-of-the-art and cleaner plants.
China considers further taxes and tariffs on steel products
According to state officials and media reports, further measures were called for at a meeting of the Chinese State Council on May 19, 2021. Among other things, the Chinese government would like to consider further export duties on some steel products, the provisional reduction of tax rates on pig iron and steel scrap as well as the possible further abolition of export tax rebates on steel products for this purpose.
Will the new Chinese steel export taxes start on July 1, 2021?
First market sources report a possible double-digit export tax rate on steel products. A possible start date of July 1, 2021 has now been mentioned more frequently. However, official confirmation of the level and start date is still pending.
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To the point: EU and USA agree on further talks
The European Commission and the U.S. government have agreed that the EU will not further increase certain punitive tariffs on U.S. products for the time being. The ensuing media storm has contributed to some disagreement in the process. And led to uncertainty as to what had actually been decided.
An understandable explanation at China Daily
Europeans suspend tit-for-tat tariffs on steel and aluminum for up to six months
The European Union and the United States agreed on Monday to pursue talks to end their dispute over steel and aluminum tariffs, with the EU suspending retaliatory measures in the hope Washington reciprocates during US President Joe Biden’s visit to Brussels next month.chinadaily.com.cn
China Daily summed it up nicely and put it clearly in a nutshell. Click here for the full article.
Italian wire rod mills stay away from the market, sharp price increases expected
Wire rod producers in Italy continued to hold back on new supply Wednesday, May 19. Market observers expect them to return next week with significantly higher prices. Fastmarkets reports that.
In Spain, some producers have already increased their offers in the face of material shortages and expensive input material.
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