Shihua Financial Information reported that Chinese move to remove the export duty on 67 steel products may do little help to stem the falling steel market, since the export demand has dried up amid worldwide economic downturn.
Chinese government has scrapped the export tariff on 67 steel products, including HR coil, HR medium plate, section and some alloy steel as of December 1st 2008.
The affected products take up 46% of China"s total steel export last year, which indicates that Beijing has replaced its priority of reducing emission, energy conservation and curbing export with ensuring economic growth. However, the export duty on low end products remains unchanged as Beijing continues to discourage export of these low value-added products.
The export tax change has not touched upon higher end products such as CR steel, galvanized steel and silicon steel, which enjoy export rebate of 5% at the moment. Market insiders believe that the authority would unveil more stimulus policy like raising up the export tax rebate once the export market deteriorates further.
Leading HR steel producers like Baosteel, Wuhan Steel and Angang would benefit from the tax adjustment, and exporters of plate, section and tube such as Jinan Steel, Nanjing Steel and Valin Steel would also welcome the tax regime change. However, the impact of the policy would not be felt until January of next year since there is a time lag of 1 to 2 months between the export order and shipment. Therefore, the export market outlook remains bleak in the short term if the physical economy has yet to show sign of recovering.