China Securities Journal reported that removal of tax rebates for the exports of some basic steel products is possibly sending the steel industry into worst predicament in the third quarter and consequently pushing down the futures price of rebar in shanghai.
As declared, HRC, medium plate and some gauges of CR coil and strip and sections will have the existing 9% rebate removed as of July 15th.
The policy is beyond the market expectation that the export tax rebate will be reduced to 7% from 9% plus that the industry has already faced with tough export environment, outflow in the third quarter is predicted to be tumble. One forecast does not exclude the possibility that the monthly steel outflow could come below 1 million tonnes.
In the futures market, contract for rebar 1010 opened low at CNY 4,130 per tonne experienced a surge before the retreat and closed at CNY 4,138 per tonne on June 22nd.
Galaxy Futures research team noted that this cancellation of steel export tax rebate is in accordance with the national policy of industrial restructuring and cutting unit GDP energy consumption down 20% in the 11th five year plan period. But the toughest lever will dampen the industry''s operation.