China, the world's biggest steel exporter, will adopt a new steel export licensing rule on May 20 in an attempt to rein in skyrocketing overseas shipments.

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According to the rule, released by the Ministry of Commerce and the General Administration of Customs, domestic firms must apply for licenses to export 83 categories of steel products, including hot-rolled steel sheets and plates.

The licenses will be valid for three months.

Luo Bingsheng, vice-chairman of the China Iron & Steel Association, told China Daily the rule will limit the number of domestic steel exporters by raising the qualification threshold.

There are more than 11,400 steel exporters in China, and the number, Luo said, is too high.

Exports of finished steel products soared 125.3 percent year-on-year to 14.13 million tons in the first quarter of 2007 thanks to strong demand and high prices in international markets, according to data from the steel association.

The rule comes after China decided on April 15 to slash tax rebates on exports of 76 categories of steel products to 5 percent from 8-11 percent, as well as remove tax rebates on another 83 categories.

These moves appear to be part of China's growing efforts to slow its trade surplus. From January to March, the country's trade surplus nearly doubled from a year earlier to $46.44 billion.

Luo said China's 2007 steel exports will be even lower than last year as a result of the new measures, despite the first quarter increase.

The nation exported 43 million tons of finished steel products in 2006, jumping 109.6 percent from the previous year.

Asked whether the government will impose quotas on domestic steel exporters, Luo said further actions could be possible if the current measures don't work.

"The government is determined to bring down steel exports," he said.

He said China's swelling steel exports have triggered a series of trade disputes with foreign countries and some of them are preparing to take anti-dumping measures.

"However, we never dump steel products in foreign markets and hope to settle conflicts through consultations," he stressed.

The United States, European Union and South Korea are the top three overseas markets for China-made steel products, accounting for more than half of the country's overall steel exports.

Crude steel production in China climbed by 22.3 percent to 114.7 million tons in the first three months of this year.

Luo predicted full-year production will reach 462 million to 475 million tons, up from 418.8 million tons in 2006.

China plans to eliminate 35 million tons of outdated steel production capacity this year to save energy and prevent an oversupply in the domestic market.

(China Daily 05/09/2007 page13)