China has set the ceiling for steel exports at 10% of the country's output, according to a report in the Economic Observer weekly newspaper in Beijing. Projections from government agencies say exports should be about the same as the 43 million metric tons of 2006. However, exports at midyear 2007 already are around 33 million metric tons.

China's crude steel output reached 41.3 million metric tons in May, rising 15.7% from the same period last year, according to China's National Bureau of Statistics. Crude steel production in the first five months reached 195.62 million metric tons, growing 20% year-on-year.

China's domestic steel producers and the National Development and Reform Commission reached the agreement on the export cap as part of a campaign to crack down on growth in energy-intensive and high-polluting industries. China has been trying to check overseas shipments with special taxes and the removal of export tax rebates. Earlier, Luo Bingsheng, vice chairman of the China Iron and Steel Association, told the XFN-Asia News Service that steel product exports were expected to slow in the second half of this year due to the cuts in export rebates.

China has just levied 5–10% export tariffs on 82 categories of steel mill products and has lifted tariffs on another 10 categories to 15–19%. This step followed a similar one in April, when the government cut export tax rebates on 76 categories of steel products to 5% from 8–11% and removed tax rebates completely on another 83 categories.

China exported a total of 6.17 million metric tons of steel products in May, the Shanghai Securities News reports, citing a government official. Total exports of steel products rose 117% in January–May to 27.44 million metric tons, Yang Hongbin, vice special commissioner of commerce, tells a recent steel forum. Imports of steel products in the first five months of this year fell 6% from a year ago to 7.28 million metric tons, Yang says, creating a trade surplus of more than 20 million metric tons.

Meanwhile, leaders of trade associations that represent North American steelmakers have expressed "strong doubts" about China's pledge to reduce exports.

"We have seen posturing like this by China before," says Andrew G. Sharkey III, president of American Iron and Steel Institute, saying that China has made other commitments regarding steel production and trade in the past, none of which it has kept. Thomas Danjczek, president of the Steel Manufacturers Association, which represents the electric furnace steelmakers, points out that 10% of China's production will equal half of U.S. annual production.

In a statement, Sharkey says that "China makes promises, and then ignores them" and complains bitterly about previous Chinese government commitments to limit new capacity, to close inefficient and polluting steel mills and to revalue its currency. "It's not clear to me why we should believe China's promises now," he says.

"China is not a low-cost steel producer," asserts Danjczek. "What gives the Chinese government, with its state-owned steel industry, this sense of entitlement...to determine the amount of steel to be exported?"

The two steel industry executives previously have expressed concerns over the expansion of Chinese steelmaking, which has grown by nearly 400% in the last 10 years. They also have alleged that the Chinese government still is subsidizing its steel industry in violation of its World Trade Organization commitments.