Japan and China Discuss on Chinese Steel Reduction

Delegations of Japanese and Chinese governments and steel industries held the 14th round dialogue on Tuesday in Tokyo. Chinese delegation explained they have reduced pig iron production capacity by 46.59 million tonnes and steel making capacity by 37.47 million tonnes by the end of 2007. They will continue gradual reduction of surplus output equipment and examine export restrict measures. On the other hand, China side advocated Chinese steel trade deficit against Japan increased to US$ 6.97 billion in 2007, which expanded by 2.5 times from 2001, that means the trade becomes imbalance. Japan side replied that Japanese products are uncompetitive with Chinese products which are high-grade steels to export to Japanese users.Chinese delegation explained Chinese crude steel output increased by 9.1% to 169.78 million tonnes in January-April 2008 from the same period of 2007. They interpreted the growth rate to be slower. However, they said Chinese crude steel output may increase by 4.7% to 512 million tonnes through 2008 from 2007, or 540 million tonnes at maximum, due to capacity expansion in the second half of 2008. They added that spot steel demand is estimated to generate at about 10 million tonnes for reconstructions after Sichuan big earthquake.Chinese steel export decreased by 9% year-on-year during October-December 2007 due to export restrict measures including export tax revision or tax rebate cut. The export decreased by 23.9% year-on-year for January-April 2008 thanks to domestic strong demand. China side explained the export is expected to decrease by 27% to 48 million tonnes through 2008 from 2007.