The Chinese central government authorities announced on October 28, 2006, the imposition of a 10 percent export tariff on semi-finished products, mainly billets, as well as on around 30 ore types and steel products.
According to the announcement, in addition to the export tariff, the import tariffs on certain coal types, which varied from three to six percent, have been reduced to the 0-3 percent range.
It is reported that
China's domestic market has not shown any evident reaction to the new tariffs which will come into force on November 1, 2006. The common expectation in the market is for a decrease in exports and also a decline in domestic
billet prices. As a result of the reduction in
billet exports, an increase in
wire rod and
rebar exports is predicted. If that happens, then the government is expected to reduce the tax rebate on finished steel exports once again.
Meanwhile, some market players think that reducing
billet exports will not have a very obvious impact on long steel prices and exports, because monthly
rebar production in
China is seven million tons, whereas total
billet and
slab exports amount to one million tons. Besides, the percentage of 20MnSi grade
billet exports of the total figure is less than that of Q235 grade.
According to market reports, because billets not cleared by customs before November 1, 2006 are subject to the new tariff, there is a problem regarding approximately 500,000 metric tons of billets - the deals for which have been concluded but which have not been shipped yet.
In addition, it has been reported that the
China Iron and Steel Association (CISA) is attempting to set up a controlling mechanism by determining a quota for each mill regarding exports to
Europe. This mechanism is planned to be put into effect in 2007.