China announces new tariffs on certain steel products

SteelOrbis Shanghai In order to curb the exports of commodities of high energy consumption and high pollution, China's State Council has just approved the adjustment of interim tariffs on some imported and exported commodities. This tariff rate adjustment will be effective as of November 1, 2006. As regards exports, an interim tariff rate will be imposed on 110 items. The interim tariff rates of 44 varieties of mineral products are at 10 percent, the rates of four other kinds of energy products are at five percent, while those of ferroalloy, pig iron, and semi finished steel and some other steel products (total 30 kinds) are at 10 percent. The tariffs imposed on billets may lead to an increase for billet export prices. Therefore, billet prices may decrease sharply in the domestic markets. However, slabs are not expected to be influenced as much as billets. China is competing with Turkey and the CIS countries in the international billet market. Therefore, the price differences are relatively little and so the tariff will influence China's billet exports significantly. However, in the slab market, the most important rival of China is Brazil, and there is a wide difference between the slab prices of the two countries. In addition, China does not export much slab. Therefore, Chinese slab exports are not expected to be influenced much. The billet prices in the international markets may also increase due to the higher Chinese prices. Also, the tax on billets means higher production costs for the rolling mills in Southeast Asia, which import billets from China. Therefore, China's rebar export quantity and prices may also increase. Meanwhile, according to the new policy, a relatively low tariff rate will be effective on 58 varieties of imported commodities. Of these, the tariff rates on coal and 25 other kinds of natural resource products will be reduced from 3-6 percent to 0-3 percent.