After China announced the imposition of its export tax on steel products, buyers and sellers of Chinese material have entered into a period of debate. Asian countries are among the markets that have been most influenced by the change in China's export regulations. It seems that the new situation has slowed down trading activities a great deal as buyers are holding on to bookings with the expectancy that prices may fall further, while sellers are endeavoring to cling to their prices and avoid any softening.
Reports from Asian countries say that the export tax has become an issue of argument as regards how it should be split between the interested parties. For this reason, many contracts are reported not to have been settled yet, with resulting delays in the securing of orders.
On June 4, 2007, Malaysian flat rolled producer Megasteel Sdn Bhd announced that they will shut down for six weeks of maintenance and upgrading. This shutdown is reportedly a planned one, and therefore it may not cause any delay of orders. However, the Malaysian market in general is not very active as they are expecting new regulations to be issued for construction steel in the framework of the new five-year plan to be released within the current year.
The higher percentage export duty implemented by the Chinese is on long products. Added onto Chinese export offers, the 10 percent duty is considered a little excessive and is discouraging consideration of exports from China as most buyers are able to supply at better numbers from their own domestic sources under today's market conditions in Malaysia.
Chinese mill Wuhan Iron and Steel Corporation (WISCO) announced a price drop of about RMB 100-350/mt ($13-45/mt) varying according to product for their ex-factory prices. Industry insiders comment that this could be the start of a new price fall in both China and in other Asian markets. Market players are eyeing what actions the other Chinese producers will take with regard to their pricing decisions.