Chinese steel mills may raise export prices on export rebate withdrawal- 29 Jun 10

According to the announcement of China’s Ministry of Finance, the export tax rebate of 406 commodities, including steel, medicine, chemicals and metals will be cancelled from the 15th of July. Insiders expect that the cancellation will force Chinese steel mills to raise export prices.

In Chinese steel industry, iron ore is imported from abroad at high price, while steel products exported overseas are still enjoying the government’s export tax rebate. Besides, China is providing exported steel products with subsidy, while foreign countries are levying anti-dumping duties against those products, which means that China are passing revenue to foreign countries as a matter of fact. So China is actually the big loser in the trade war.

Lat year, as export situation is adverse, China raised the export rebate rate, and foreign countries took the chance to force down the price of exported steel products. This time, when the steel export tax rebate is going to be cancelled, the cost will certainly go up, and Chinese steel mills will probably seize the chance to raise the price of exported steel products.

The commodities included in the cancellation are mainly high polluting and high energy consuming products, which is the reflection of China’s policy to change the economic growth pattern and restructure the economy. As to the steel industry, the cancellation will certainly raise the cost of exported steel products.

However, Chinese steel mills can still absorb the rising cost by increasing export prices, through the negotiation with foreign distributors.

Jun 29, 2010 10:35
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