China steel makers cheer US move
( 2003-12-05 16:08) (Agencies)
Top Chinese steel makers, including Baosteel, welcomed the US decision to scrap controversial tariffs on steel imports, saying it could prop up their bottom lines.
The commerce ministry had no immediate comment, but said it may issue a statement later in the day.
Analysts said the move might prompt China to reverse its own retaliatory measures imposed after the US government declared tariffs of up to 30 per cent on steel imports in March last year.
Yielding to international pressure, US President George W. Bush on Thursday scrapped most of the tariffs on steel, 16 months ahead of schedule, averting a potential trade spat that threatened to strain ties with Europe and Asia.
While there would be little immediate impact on Chinese steel makers, which have only tiny exports, the longer-term effect on local prices - watched closely by exporters such as South Korea's POSCO and Nippon Steel in Japan - could be negative, according to some analysts.
"A US decision to scrap import tariffs will be a double-edged sword for Chinese steel makers," said Zhang Lei, a steel analyst at Merchants Securities.
"China's sales to America are small- in the hundreds of millions of tonnes... On the other hand, the cancellation of US tariffs may spark similar moves by other governments, including China."
That could invite an influx of steel that could pressure domestic prices, he added.
But Maanshan Iron and Steel called it "good news", while Baosteel was even more optimistic.
"Only around four per cent of our exports go to the United States," an executive at the world's fourth-most valuable steel company told Reuters. "The US tariff abolition will make it possible for the Asian steel giants, such as Nippon Steel and POSCO, to sell more to the United States.
"Consequently, there will be less supply on the Chinese market and that will push up prices here, helping boost the bottom lines of domestic producers," he said.
Baoshan Iron and Steel Co Ltd was virtually flat at 7.10 yuan in early Friday trade.
Official figures showed Chinese producers exported a combined 5.6 million tonnes of steel in the first nine months of 2003 - only about three per cent of the country's total output of 170 million tonnes over the period.
And the bulk of those exports were low-end products - crude steel or hot-rolled steel products.
China's exports are mainly sold in Asia and Europe. Figures for exports to the United States alone were not available.
China set temporary tariffs on imports of some products of up to 26 per cent last November, saying they would last three years. ($1;8.277 yuan)
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