Net exports of China's crude steel are expected to drop 60 percent for the second half compared with the first six months, according to the China Iron and Steel Association (CISA).
Net exports of crude steel stood at 30.6 million tons for the first six months, and are forecast to fall to 12.24 million tons in the second half.
From April to June, the government took a series of measures to curb steel exports, which accounted for the forecast, said CISA secretary general Luo Bingsheng.
The government lowered export rebate rates of some special steel products and cold-rolled products to five percent from April 15. It then removed export rebates on 83 steel products and lifted the export tax from five to ten percent on them from June 1. Export taxes on primary steel products were also raised by five percentage points.
Based on the quantity and value of steel exports in 2006, these measures would increase the total cost of steel exports by 21.8 billion yuan, forcing steel producers to sell on the domestic market, said Luo.
If producers failed to reduce production in the second half, the domestic market would be over-supplied and prices would fall, Luo said.
Meanwhile, fewer exports from China would push up international prices and lead to an export rebound.
"This will probably result in drastic domestic market fluctuation. Steel producers had better set production goals in accordance with demand and slow their production growth rates to keep a stable market," he said.
China's crude steel output amounted to 41.5 million tons in the first half, up 13.3 percent from the same period in 2006.