Iron Ore and Steel News Roundup

SHANGHAI, Aug 2 (SMM) - A roundup of the ferrous metals headlines of the week.

China to put development of domestic iron ore as a national strategy during the 14th Five-Year Plan period

The China Iron & Steel Association held a meeting in Shanghai on July 29 regarding the development of iron ore.

The meeting proposed to put the development of domestic iron ore as a national strategy during the "14th Five-Year Plan" period (2021-2025), remove policies that are not beneficial to the development of iron ore resources, speed up the overall development, and increase the self-sufficiency rate.

China also needs to steadily promote the development and utilisation of overseas resources, accelerate the construction of super large iron ore projects in West Africa and Western Australia, and increase the proportion of Chinese investment in overseas iron ore projects.

Efforts will be made to promote the establishment of a reasonable iron ore pricing mechanism. Other issues discussed at the meeting included the lack of value-added tax invoices for steel scrap and difficulties in determining income tax in the steel scrap industry, and how to increase the amount of domestic scrap steel resources.

The Ministry of Ecology and Environment to formulate staggered production programme for steel enterprises in autumn and winter

Wu Xianfeng, deputy director of the Department of Atmospheric Environment of the Ministry of Ecology and Environment, said that the shift from reducing crude steel production capacity to reducing actual crude steel production is a major policy adjustment in the steel industry this year. He added that the reduction of crude steel production must follow the principles of “maintaining high-quality capacity while eliminating outdated capacity, reducing output while improving quality”.

The Ministry of Industry and Information Technology and the Ministry of Ecology and Environment will work with relevant parties to formulate a plan for staggered production of steel enterprises in autumn and winter. Steel enterprises should formulate output reduction plans in accordance with specific output reduction tasks, reduce operations of production lines that apply outdated equipment and technology. Steel enterprises could also choose to implement maintenance plans in autumn and winter to ensure that the full-year output reduction goals are achieved. 

China raises export tariffs on steel products and cancels export tax rebates for high value-added products

China’s State Council Tariff Commission is increasing the export tariffs of ferrochrome and high-purity pig iron from August 1 by 40% and 20% respectively.

In addition, according to a joint announcement issued by the Ministry of Finance and the State Administration of Taxation, starting from August 1, China will also cancel export tax rebates for 23 steel products including steel rails. This is the second time that China has adjusted steel tariffs in this year. In the first adjustment of tariffs in May, the export tax rebates of 23 high value-added products were retained, but they are all cancelled during this round.

International shipping costs soared by 5 times

As Covid-19 domestic prevention and control is normalised, foreign trade has ushered in a recovery. At the same time, containers on ocean routes have become "scarce", and freight rates have risen sharply. 

According to a freight forwarding company,  the container capacity of international routes has been in short supply since April, and the freight rate has increased by about 5 times compared with the same period in 2019. For instance, one month’s advance notice is needed for bookings for European and American routes. Strong logistics demand and insufficient capacity supply have led to an increase in freight rates. In addition, major destination ports in North America and Europe have been hardly hit by Covid-19, and the turnover efficiency has declined, which has also exacerbated the difficulty of finding a container in domestic shipping.