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Domestic demand helping Chinese steel industry to overcome trade friction

China steel industry has been compelled to face more trade frictions than before because of the international financial crisis. Since 2008, many countries such as the European Union, the United States, Russia and India have launched anti dumping and countervailing investigations on Chinese steel products.

And analysts predict that the world will enter a period of high international trade friction in the three to five years after the crisis.

Because of sharp contraction of demand in the international market and the ongoing trade frictions, China steel exports have been through a hard time. According to customs statistics China steel exports in 2009 decreased by 58.5% YoY. Among this the seamless tube exports fell by nearly 50% YoY.

Thus many Chinese steel mills relied more on domestic demand and saw growth in domestic sales.

For example stainless steel exports of Taiyuan Iron & Steel Group dropped by 56% YoY but its domestic sales increased by 58.75% achieving total profit of CNY 1 billion.

However uncompleted technical standards for domestic high end steel products constrain the domestic sales.

An analyst from Henggang said because there are no such technical standards, each enterprise who wants to sell a high-end steel product has to do a series of certification. And the recognition of Chinese domestic users is relatively low. They seem to prefer import products even China-made high-end steel products meet or exceed the quality of imported ones. So he suggests that technical certification standards for high-end steel products should be completed as soon as possible.

Mr. Qi Xiangdong said international steel market in 2010 will be better, but as intensified international trade protectionism Chinese steel exports will still face many difficulties.

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