What is the impact of tariff adjustments on steel prices

There are two critical points in the long-term impact of this round of tariff adjustments:
One is to expand the import of recycled steel raw materials, which will break the dominance of iron ore. Once the price of iron ore is stabilized, the steel cost platform will move downward, driving steel prices into a phased adjustment cycle.

Second, the price difference between China's domestic and foreign markets fluctuates. At present, although China's domestic steel prices continue to rise, in the international market, China's domestic market is still in a "price depression". Especially for hot-rolled products, even if the export tax rebate is cancelled, the price of domestic hot-rolled products in China is still about US$50/ton lower than other countries, and the price competitive advantage is still there. As long as the export profit margin meets the expectations of steel enterprises, simply canceling export tax rebates will not be able to quickly realize the overall return of export resources. According to analysis, the inflection point of the return of steel export resources is expected to occur when China's domestic steel prices rise again or when overseas market prices are high.

In general, the adjustment of the tariff policy on steel imports and exports will bring certain repairs to market supply, demand and costs. However, with the policy of reducing crude steel production unchanged, the market rate will remain in a state of tight supply in both short-term and long-term. Under this circumstance, it is difficult for the price of steel products to fall sharply in the later stage, and more will show a high consolidation trend.