Chinese Steel Exports to the United States Dropped Dramatically in 2016

June 26, 2017 2:45 PM

On April 20, 2017, the Trump administration self-initiated an investigation on whether steel imports “threaten to impair" national security, using section 232 of the Trade Expansion Act of 1962. President Trump claimed that “both the United States and global markets for steel products are distorted by large volumes of excess capacity—much of which results from foreign government subsidies and other unfair practices."

China is the world’s largest steel-producing country. With 808.4 million tons last year, the country accounted for roughly half of the world’s production of 1,628.5 million tons. Although the president said “this (the 232 investigation) has nothing to do with China," Secretary of Commerce Wilbur Ross’s comments that “steel imports …[have] continued to rise despite repeated Chinese claims that they were going to reduce their steel capacity" seemed to point to China as a major target of the investigation.[1]

However, less than 1 percent of Chinese steel exports were sold to the United States in 2016. So few Chinese steel products were exported to the United States because 20 US trade remedies against steel mill imports from China were in effect as of December 1, 2016. Four of these trade remedies went into effect last year, resulting in a 57 percent drop in Chinese steel exports to the United States, from 2.21 million tons in 2015 to 0.95 million tons in 2016.

This post updates a previous post with 2016 data on China’s steel production and exports. A follow-up post will build on these statistics and discuss China’s steel overcapacity and the nation’s capacity cuts last year.

Crude Steel Production

China’s share of global crude steel production increased dramatically since 2005. China remained the largest steel producer in 2016, with a slight increase from 798.8 million tons in 2015 to 808.4 million tons in 2016, 1.7 percent lower than the 2014 peak at 822.7 million tons.

Table 1 Crude Steel Production, million tons
Year China European Union United States Japan Korea India World
2005  355.8   195.7   94.9   112.5   42.8   45.8   1,148.0 
2006  421.0   207.4   98.2   116.2   48.5   49.5   1,250.1 
2007  489.7   210.3   98.1   120.2   51.5   53.5   1,348.1 
2008  512.3   198.7   91.9   118.7   53.6   57.8   1,343.4 
2009  577.1   139.4   59.4   87.5   48.6   63.5   1,238.8 
2010  638.7   172.9   80.5   109.6   58.9   69.0   1,433.4 
2011  702.0   177.8   86.4   107.6   68.5   73.5   1,538.0 
2012  731.0   168.6   88.7   107.2   69.1   77.3   1,560.1 
2013  822.0   166.4   86.9   110.6   66.1   81.3   1,650.4 
2014  822.7   169.3   88.2   110.7   71.5   87.3   1,670.1 
2015  798.8   166.2   78.8   105.1   69.7   89.0   1,615.4 
2016  808.4   162.0   78.6   104.8   68.6   95.6   1,628.5 
Source: World Steel Association and the German Steel Federation.      

During 2005–16, India nearly doubled its crude steel production, from 45.8 million tons in 2005 to 95.6 million tons in 2016, and Korean production grew by roughly 60 percent. Other major countries reported declining output over the same period. Average annual growth in crude steel production during 2006–16 was 8.0 percent and 6.9 percent in China and India, respectively, both much higher than the average world rate (including China and India) of just 3.4 percent. But production slowed in both countries over the past three years: Annual growth averaged –0.5 percent in China between 2014 and 2016, and 5.6 percent in India.

Steel Exports

Globally, Chinese steel exports decreased slightly in 2016, down by 3.85 million tons compared to 2015 (table 2). Exports to the four major economies (the United States, the European Union, Japan, and Korea) continued to decline, dropping from 23 percent of total Chinese steel exports in 2015 to 21 percent in 2016. ASEAN member states accounted for 36 percent of total Chinese steel exports in 2016, up 5 percentage points from 2015 and more than 10 percentage points higher than the average pre-crisis level of 23.4 percent during 2005–07. Disaggregated data compiled by the United States International Trade Administration show similar export trends.

Table 2 China steel exportsa to trading partners, million tons  
Country 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
United States 2.29 5.26 3.94 4.85 0.93 0.88 1.38 1.81 2.02 3.18 2.21 0.95
European Unionb 1.40 7.50 11.13 7.57 1.57 3.81 5.09 3.88 3.53 6.16 8.49 6.39
Japan 1.03 0.72 0.88 0.82 0.41 0.80 0.92 0.87 0.75 1.55 1.31 1.25
Korea 6.63 10.25 13.05 14.18 5.53 8.41 9.96 9.93 9.69 12.94 13.46 14.30
Subtotal 11.34 23.73 29.00 27.42 8.44 13.89 17.34 16.49 16.00 23.82 25.47 22.90
                         
ASEAN 7.80 10.97 13.23 9.31 4.56 8.23 9.44 14.10 17.29 26.16 34.40 38.57
  Vietnam 1.76 3.29 4.33 2.73 1.46 2.47 1.83 2.51 3.84 6.60 10.10 10.97
  Philippines 0.65 1.12 1.42 0.90 0.42 1.14 1.30 1.69 2.43 4.77 5.59 6.50
  Thailand 2.29 2.29 2.09 1.57 0.70 1.29 1.92 2.99 2.86 3.68 4.72 6.20
Africa 0.42 1.22 2.09 3.03 2.30 2.21 2.63 3.13 4.48 6.63 9.11 8.49
Middle East 0.77 3.31 9.36 7.76 2.51 4.00 4.80 5.38 6.43 11.42 15.28 14.05
Latin America and the Caribbean 0.30 1.76 2.38 3.16 1.40 4.35 4.61 5.57 6.37 9.42 9.45 7.66
World 26.88 50.96 67.77 59.25 23.58 41.22 47.43 54.29 61.08 92.34 110.93 107.08
a. Includes HS 7206 to 7307, excluding 721661 to 721699, 730120, 730230, 730290, 7303, 730711, and 730719. This definition is adopted from table 3 of the OECD report "Recent Market Developments in the Global Steel Industry" in February 2016, available from the Organization for Economic Cooperation and Development.
b. Includes EU 28. 
Source: Trade statistics for international business development, http://www.trademap.org/.

Chinese steel exports to the United States decreased sharply in 2016. The United States purchased just 0.9 percent (0.95 million tons) of Chinese steel exports, a drop of 57 percent from 2.21 million tons in 2015. Chinese exports to the United States in 2016 roughly equaled levels during 2009–10, the years of acute financial crisis.

The dramatic decline in US imports of Chinese steel products in 2016 was mainly due to four new antidumping (AD) and countervailing duty (CVD) orders that went into effect on June 2 (corrosion-resistant steel products) and July 14 (cold-rolled steel flat products).

The orders on Chinese cold-rolled steel flat products imposed an AD duty of 265.79 percent and a CVD rate of 256.44 percent, respectively. Chinese steel exports to the United States covered by these two orders experienced sharp declines. For example, Chinese steel exports to the United States under the Harmonized System (HS) code 720917 dropped from 132,689 tons in 2015 to 17 tons in 2016.[2] Other products that experienced dramatic declines include HS codes 720915, 720916, and 720918, all subject to the new orders. Combined Chinese steel exports to the United States under these 6-digit HS codes decreased from 417,159 tons in 2015 to 210 tons in 2016.

Exports of products classified under HS codes 721049, 721061, and 721070 also decreased substantially. These fell mainly under orders on certain corrosion-resistant steel products that imposed an AD duty of 209.97 percent and CVD rates up to 241.07 percent, respectively.[3] Collectively, Chinese exports entering the United States under these three 6-digit HS codes decreased from 646,037 tons in 2015 to 18,973 tons in 2016. Hence, the leading products covered by various new AD and CVD orders accounted for 1.04 million tons, or 83 percent, of the overall decline in Chinese steel exports to the United States in 2016.[4]

Notes

[1] See Press Briefing by Secretary of Commerce Wilbur Ross on the Memorandum Regarding the Investigation Pursuant to Section 232 (B) of the Trade Expansion Act for more detail. Contrary to Secretary Ross’s claim that “steel imports have continued to increase," data compiled by the International Trade Administration indicates that US steel imports were 40.3 million tons in 2014. The number decreased to 35.4 million tons in 2015, and declined again in 2016 to 30.1 million tons. See Global Steel Trade Monitor, Steel Imports Report: United States, March 2017, for more detail.

[2] HS 720917: Flat-rolled products of iron or nonalloy steel, of a width of 600 mm or more, cold-rolled (cold-reduced), not clad, plated or coated: In coils, not further worked than cold-rolled (cold-reduced): Of a thickness of 0.5 mm or more but not exceeding 1 mm.

[3] Tariff lines 7210.70.6030, 7210.70.6060, and 7210.70.6090 are covered by AD/CVD orders on corrosion-resistant steel products; tariff line 7210.70.3000 is covered by AD/CVD orders on cold-rolled steel flat products. The subsidy rate on Angang Group Hong Kong Company Ltd, Baoshan Iron & Steel Co., Ltd, Duferco S.A., Heiban Iron & Steel Group, and Tanghsang Iron and Steel Group Co. Ltd, Changshu Everbright Material Technology, and Handan Iron & Steel Group was 241.07 percent. For all other Chinese exporters, the subsidy rate was 39.05 percent. See United States International Trade Commission, Antidumping and Countervailing Duty Investigations for more detail.

[4] Total US imports of products under HS codes 720915–720918, 721049, 721061, and 721070 declined by 435.60 thousand tons in 2016. US imports of these products from China, India, and Korea—all subject to both the AD/CVD orders on cold-rolled steel flat products and the AD/CVD orders on certain corrosion-resistant steel products—declined by 1,540.00 thousand tons. Imports from Brazil, Japan, and Taiwan, all subject to one of the previously mentioned AD/CVD cases, decreased by 149.67 thousand tons. Meanwhile, products entering the United States from Vietnam, Turkey, Mexico, Canada, Thailand, and Germany under the above 6-digit HS codes increased by 1,168.10 thousand tons in 2016.

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