SteelOrbis Shanghai
A person close to Central Committee of
China said that the export tax rebate policy has been completed and it might be announced in the last ten days of June, being effective from July 1.
The source said that, the export tax rebate on steel products would be decreased to 5 percent from the existing 11 percent, as announced earlier, meanwhile no export tariffs will be brought on semi-finished products and the existing “zero tariff, zero tax rebate” policy will continue. The rebate adjustment for steel products was expected in May but it has been postponed.
The adjustment of rebate policy will cover a wide range of products, including steel products, textile products and some other favorable Chinese export products. Therefore, it will be the first comprehensive amendment on Chinese export policy.
Since the beginning of this year, Chinese export has continued a rapid increase with further enlargement of trade surplus and foreign exchange reserve reached a new peak, triggering the dissatisfaction of the international trade partners. US threatened to impose 27.5 percent punitive tariff on imported Chinese products and EU also carried out anti-dumping investigation on Chinese products.
The rapid rise in Chinese steel prices this year is greatly related with the exports. Therefore, the adjustment of export tax rebate will inevitably cause to an important pressure on domestic steel prices, especially for those with large export quantities. For example, the prices of hot rolled flat products and
wire rods are likely to go down in the short term after the tax rebate reduction. However, the brisk demand in international market will continue to need Chinese steel products. Therefore, Chinese export prices will increase further, eliminating or partly eliminating the influence brought by tax rebate policy. Meanwhile, exporters may focus on exporting more semi-finished products than before because no additional tariff will be imposed. However this situation will be contradicting with government's plans to reduce air-polluting products'
production and to increase value added steel
production.
Looking into steel market, further increases in international market prices may cause the currently idle old capacities to restart
production, and lead output surplus to grow further.