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China to cut steel products export rebates

(Xinhua)
Updated: 2007-03-28 16:57

The Chinese government could release its new policy on reducing the export rebate rate for steel products as early as next month, theShanghaiSecurities News reported on Wednesday.

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Insiders attending an international steel industry seminar could not agree on the specific date for the policy's release but it will either be on April 1, April 15 or right at the end of April, the newspaper said.

The new policy is expected to lower the export rebate rate for steel products with high added value like cold-rolled steel coils and galvanized plates to five percent, and cancel rebates for some products such as steel wire and steel sheet products.

Zhang Guobao, deputy director of theNational Development and Reform Commission, confirmed on March 18 that the government was working on the new policy to curb rising exports.

Some businessmen involved in the steel trade are worried they will not be able to survive if export rebates for major items are abolished, as the average profit margin for the export of steel products stands at six percent.

However, Wang Heng, with Anshan Iron & Steel Group Corporation, said that although the execution of the new policy may affect enterprises in the short term, it would help to maintain the market order and enhance the competitiveness of companies.

The company will look for other ways to meet the demand of overseas customers, for instance, via exporting steel products to overseas projects of Chinese companies, Wang said.

He Kangyong, with Wuhan Iron and Steel (Group) Corporation, said in response to the new policy that his company would focus on exporting to a fewer number of clients and raise the export price this year.

The reduction in export rebates for steel products is inevitable, more out of the need to develop the country's steel sector than in reaction to criticism of China's exports of steel products, according to Yang Hongjie, an analyst with Haitong Securities.

Yang said the new policy would force the manufacturers with low added-value products out of the market but would also help steel enterprises to become more competitive in the high added-value product market.